$500 Million Penalty, A subsidiary of India's largest pharmaceutical company has agreed to pay a record $500 million in penalties and fines for selling adulterated drugs and lying to federal regulators in a case that is part of an ongoing crackdown on the quality of generic drugs flowing into the U.S.
Federal prosecutors say the guilty plea by Ranbaxy USA Inc. represents the largest financial penalty against a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.
The deal, announced Monday, concludes a years-long federal investigation into Ranbaxy's manufacturing deficiencies. The Food and Drug Administration in 2008 barred from Ranbaxy from importing more than 30 different drugs made at factories in India and, two years ago, struck a deal that required the company to ensure that data on its products is accurate, undergo extra oversight and review from a third-party and improve its drug making procedures.
The subsidiary of Ranbaxy Laboratories Limited pleaded guilty to federal criminal charges and the company separately agreed to resolve civil claims with all 50 states and the District of Columbia. The company had earlier set aside $500 million to cover potential criminal and civil liability stemming from the Justice Department investigation.
It admitted as part of the deal that it sold adulterated batches of drugs — including an antibiotic and generic versions of medications used to treat severe acne, epilepsy and nerve pain — that were developed at two manufacturing sites in India. It's not known whether the problems with the drugs led to any health issues. The problems were largely revealed by a whistleblower in a federal lawsuit filed in Maryland in 2007. The government's allegations against the company make no claims that the drugs, whose strength, purity or quality differed from the specifications, harmed anyone.
The company admitted to a wide range of deficiencies, including improperly storing drug samples that awaiting testing, continuing to sell a medication in the U.S. even after it had failed purity tests and delaying a voluntary recall of medication that it knew would not maintain its expected its expected shelf life.
Ranbaxy also admitted making false statements to the FDA in 2006 and 2007 annual reports about dates of tests that are designed to detect drug impurities and determine appropriate storage conditions. In some cases, the tests were done weeks or months after the company said they'd been performed. Or the tests were done on the same day — or within days of each other — instead of months apart, the prescribed interval.
The company said in a written statement that it had fully cooperated with the investigation, which it said involved actions from several years ago, and expects "future growth in the U.S. and around the world with a robust pipeline of important products."
"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; the conclusion of the DOJ investigation does not materially impact our current financial situation or performance," Ranbaxy CEO and managing director Arun Sawhney said in a statement.
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