​$500 Million Penalty To Ranbaxy For Adulterated Drugs​​

By: | 05/15/2013 09:32 AM ET

A record $500 million in fines will be paid as a penalty by Ranbaxy USA 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 United States.

$500 Million Penalty

Federal prosecutors said Monday 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.

It concludes a years-long federal investigation into Ranbaxy’s manufacturing deficiencies. The Food and Drug Administration had earlier barred from 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 are accurate, undergo extra oversight from a third party and improve its drug-making procedures.

The subsidiary of Ranbaxy Laboratories Limited has agreed to plead guilty to criminal charges and to resolve civil claims with all 50 states and the District of Columbia. The company had set aside $500 million to cover potential criminal and civil liability.

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.

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 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.

The company said it 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.