Regulatory Focus™ > News Articles > Ranbaxy Pleads Guilty to Felony Charges in Largest False Claims Case Ever

Ranbaxy Pleads Guilty to Felony Charges in Largest False Claims Case Ever

Posted 13 May 2013 | By Alexander Gaffney, RAC

The US Department of Justice (DOJ) has announced that Indian generic pharmaceutical manufacturer Ranbaxy has pleaded guilty to three felony charges, including lying to the US Food and Drug Administration (FDA), that will result in the company paying US authorities $500 million in penalties.


The announcement, made 13 May 2013, comes as the result of a long-running investigation into the practices of Ranbaxy, which markets several pharmaceutical products in the US market. In 2008, FDA issued an import alert regarding the company's products, warning that the company had repeatedly violated CGMP regulations and falsified information on its drug applications.

The company largely eluded the effects of that import alert until 2012, when it announced that it had signed onto a Consent Decree of Permanent Injunction that will require the company to review its facilities using a third-party expert and audit data, and withdraw applications that used falsified data. Many industry analysts saw the move as an attempt to regain wider access to US markets in light of its first-to-file status for Lipitor (atorvastatin).

The company would subsequently withdraw dozens of generic drug registrations, citing the effects of the consent decree. Those applications had all cited data generated at its Batamandi-based facility. Neither FDA nor Ranbaxy indicated whether they were aware of any specific problems with the applications.

At the time of the injunction, Ranbaxy said it anticipated that the total cost of the final settlement would be $500 million, which it added that it had set aside for that purpose.

A (Comparatively) Massive Fine

That estimation seems to have been remarkably on-point, with DOJ announcing that the total cost would indeed be $500 million after Ranbaxy pleaded guilty to three felonies: making false claims about its products, manufacturing products not in conformity with current good manufacturing practices (CGMPs), and making false statements to FDA.

The fine is comparatively massive given that many of the largest fines ever levied against pharmaceutical companies-which have exceeded $3 billion-were primarily due to the promotion of drug products using unapproved claims. Of the five largest fines, all involved off-label promotional claims. Ranbaxy's $500 million settlement would put it just barely outside of the top 10 fines ever levied.

In a statement, DOJ authorities called the settlement historic. "This is the largest false claims case ever prosecuted in the District of Maryland, and the nation's largest financial penalty paid by a generic pharmaceutical company for FDCA violations," said US Attorney for the District of Maryland Rod J. Rosenstein.  "The joint criminal and civil settlement, which reflects many years of work by FDA agents and federal prosecutors, holds Ranbaxy accountable for a pattern of violations and should improve the reliability of generic drugs manufactured in India by Ranbaxy."

Among the specific charges admitted by Ranbaxy: Knowingly introducing adulterated drugs into interstate commerce, repeatedly failing to meet CGMPs, making numerous false reports to FDA regarding the dates of stability testing conducted on its drugs, failing to file timely field alerts for failed drug testing, and using unreliable testing methods.

$350 million of the $500 million fine will go to settle false claims made against government programs. Officials said the CGMP violations meant that the drugs should never have been paid for.

The settlement will be split by the federal government ($231 million), several states ($118 million) and Dinesh Thakur, a Ranbaxy executive and whistleblower who will get $48.6 million for his role in filing a qui tam lawsuit against the company.

Tags: Fine, Ranbaxy

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