Please ensure Javascript is enabled for purposes of website accessibility

Maryland to share in Indian drug maker’s settlement

Maryland will receive $849,259 under a multistate False Claims Act settlement the federal government reached with an India-based generic drug maker in U.S. District Court in Baltimore, the state Office of the Attorney General said Monday.

The settlement — totaling about $350 million — and a $150 million criminal penalty resolved federal and state claims that Ranbaxy Laboratories Ltd. violated reporting and safety laws, as well as U.S. Food and Drug Administration regulations governing the manufacture and sale of pharmaceuticals.

U.S. Attorney Rod J. Rosenstein of Maryland said he brought the case to federal court because his office has expertise in litigating FDA-related cases, as the federal agency is based in the state. But even with that expertise, bringing the case against a foreign-based pharmaceutical company “took a while” and perhaps would not have been brought if not for a corporate whistleblower, Rosenstein said.

“The FDA relies on these companies to accurately report and to comply” with its regulations, he said. “This case came to light because of a whistleblower who brought to our attention that the company was not complying.”

Under terms of the settlement, the federal government will receive about $231.8 million and the states will share $118.2 million. The whistleblower, former Ranbaxy executive Dinesh Thakur, will receive about $48.6 million from the federal share of the settlement, according to Rosenstein’s office.

Ranbaxy will also pay a criminal fine and forfeiture totaling $150 million after pleading guilty to three felony counts of having violated the Federal Food, Drug, and Cosmetic Act and four felony counts of making false claims to the FDA, the office added.

Ranbaxy Chief Executive Officer Arun Sawhney said in a statement that the settlement allows the company to move forward.

“We are pleased to continue bringing safe, effective and quality medicines to market for the benefit of consumers in the U.S. and other parts of the world,” Sawhney said. “While we are disappointed by the conduct of the past that led to this investigation, we strongly believe that settlement of this matter now is in the best interest of all Ranbaxy’s stakeholders; the conclusion of the [Department of Justice] investigation does not materially impact our current financial situation or performance.”

Ranbaxy has not imported drugs into the United States from its Indian facilities at Paonta Sahib and Dewas since Sept. 16, 2008, when the FDA placed the company’s pharmaceuticals on an Import Alert. Last year, the company and federal government agreed that the alert will remain in effect until the two facilities come into full compliance with federal law and FDA regulations, according to Rosenstein’s office.

The company allegedly violated the False Claims Act between April 1, 2003, and Sept. 16, 2010, after manufacturing, distributing and selling drugs whose strength, purity or quality did not comply with FDA-approved formulations.

As a result, the company caused false claims for these drugs to be submitted to a variety of federal health plans, including Medicaid, Medicare, the Federal Employees Health Benefits Program, the Department of Veterans Affairs and the U.S. Agency for International Development, the government’s complaint alleged.

The drugs included sotret, used to treat severe nodular acne; gabapentin, used to treat epilepsy; and ciprofloxacin, a broad-spectrum antibiotic.

On the criminal side, Ranbaxy admitted to making false statements to the FDA in 2006 and 2007 regarding the dates of tests conducted on certain drugs, Rosenstein’s office stated.

Rather than conducting the tests months apart, as the FDA requires, the tests were conducted within days of each other, resulting in unreliable expiration dates. The company also acknowledged having stored drugs for unknown periods of time in a refrigerator that did not meet FDA-approved temperature and humidity ranges, the office stated.

The resolution of the criminal and civil allegations “should improve the reliability of generic drugs manufactured in India by Ranbaxy,” Rosenstein said in the statement.