NEW YORK: In the largest penalty of any generic drug manufacturer in US history, Indian drug company Ranbaxy will pay $500 million in criminal and civil damages in a settlement announced by the US Department of Justice announced Monday.
Ranbaxy USA Inc, which is a subsidiary of the Indian company, has been slapped with historic fines after it pleaded guilty on Monday to charges relating to the manufacture and distribution of certain adulterated drugs made at two of its manufacturing facilities at Paonta Sahib and Dewas in India, the Justice Department said in a statement.
Ranbaxy will pay $150 million in criminal fines and forfeiture and $350 million as payment for civil claims.
The US subsidiary of Ranbaxy pleaded guilty to three felony counts in violation of the federal Food, Drug and Cosmetic Act (FDCA), and four felony counts of knowingly making material false statements to the Federal Drug Administration (FDA).
The adulterated drugs that were produced at Paonta Sahib in 2005 and 2006 included Sotret, gabapentin, and ciprofloxacin. Sotret is used to treat severe recalcitrant nodular acne. Gabapentin is used to treat epilepsy and nerve pain and Ciprofloxacin is an antibiotic.
Under the FDCA, a drug is adulterated if the methods used in, or the facilities or controls used for, its manufacturing, processing, packing, or holding do not conform to, or are not operated or administered in conformity with, current Good Manufacturing Practice (cGMP) regulations.
During an inspection of Ranbaxy’s Paonta Sahib facility in 2006, the Federal Drug Administration (FDA) officials had found incomplete testing records and an inadequate program to assess the stability characteristics of drugs. Inspections of its Dewas facility in 2006 and 2008 by FDA officials also showed the same problems with incomplete testing records and inadequate stability programs.
After these inspections, Ranbaxy was banned from selling 30-odd drugs in the US.
“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 U.S. 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.”
On behalf of Ranbaxy, CEO & Managing Director Arun Sawhney said, “Today’s announcement marks the resolution of this past issue. 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. 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.”