Ranbaxy pays US$500m to settle generic drug manufacturing fraud case

India's largest generic drugmaker will pay approximately $350m in civil penalties and $150m in criminal penalties

An investigation by the US Department of Justice (DOJ) into data integrity and manufacturing processes at certain Ranbaxy facilities in India has been concluded, with Ranbaxy agreeing to pay $500m to meet expected costs associated with resolving the DOJ investigation, which related to conduct which occurred several years ago.

Under the terms of the final settlement agreement, Ranbaxy and its affiliates have agreed to settle alleged civil violations of the False Claims Act with the US, all 50 states and the District of Columbia. Separately, a US subsidiary, Ranbaxy USA, Inc., has agreed to plead guilty to a criminal information charging violations of the Food, Drug and Cosmetic Act and other criminal statutes. The groundbreaking settlement is the largest of its kind against a generic drug manufacturer under the qui tam provisions of the False Claims Act.

The case was brought as a result of allegations by former Ranbaxy Director and Global Head, Research Information & Portfolio Management Dinesh Thakur that the company falsified drug data and systemically violated Current Good Manufacturing and Laboratory Practices resulting in substandard and unapproved drugs. He reported the findings to company management who failed to correct the problems.

In 2005, Thakur left the company and reported the fraud to government authorities. He filed a whistleblower lawsuit in 2007 under the FCA detailing Ranbaxy's violations. The FCA's qui tam provisions allow whistleblowers to report fraud on a government programme with the protection of a court-ordered seal and confidentiality, and receive a percentage of the amount recovered in a successful case.

Thakur's lawsuit, which was joined by the Department of Justice and participating States, alleges wide-ranging manufacturing violations in Ranbaxy's facilities in India and the US, including inadequate testing to ensure that the drugs were safe, effective, free of cross-contamination, and manufactured in compliance with their approved specifications. Moreover, Thakur alleged that Ranbaxy falsified information about the drugs, including backdating tests and submitting false data where no tests were performed.

On 20 December 2011, Ranbaxy announced that it had signed a consent decree with the US FDA, committing to further strengthen procedures and policies to ensure data integrity and to comply with cGMP.

‘Today’s announcement marks the resolution of this past issue,’ said Arun Sawhney, CEO and Managing Director, Ranbaxy. ‘While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settling this matter now is in the best interest of all of Ranbaxy’s stakeholders.’

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