A subsidiary of India’s largest pharmaceutical company has agreed to pay a record US$500 million in fines and penalties 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 US.
US federal prosecutors said on Monday the guilty plea by Ranbaxy USA Inc represents the largest financial penalty against a generic drug company for violations of the US Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.
It concludes a years-long federal investigation into Ranbaxy’s manufacturing deficiencies. The Food and Drug Administration (FDA) had earlier barred Ranbaxy from importing more than 30 different drugs made at factories in India and, in 2011, struck a deal that required the company to ensure that data on its products is accurate, undergo extra oversight from a third-party and improve its drug making procedures.
The subsidiary of Ranbaxy Laboratories Ltd 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 US$500 million to cover potential criminal and civil liability stemming from the US Department of Justice investigation.
It admitted as part of the deal that it sold impure drugs developed at two manufacturing sites in India. Prosecutors said the batches of adulterated drugs included generic versions of an antibiotic and other medications used to treat a severe type of acne, epilepsy and nerve pain.
It is 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 company admitted to a wide range of deficiencies, including improperly storing drug samples that were waiting to be tested, continuing to sell a medication in the US even after it had failed purity tests and delaying a voluntary recall of medication that it knew would not maintain 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.
The company said it fully cooperated with the investigation.
“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 Department of Justice investigation does not materially impact our current financial situation or performance,” Ranbaxy CEO and managing director Arun Sawhney said in a statement.