Ranbaxy USA, Inc. Agrees to $500 Million Settlement

Ranbaxy USA, Inc., a division of generic drug manufacturer Ranbaxy Laboratories Limited based in India, has agreed with the U.S. to settle criminal and civil charges. The charges relate to the manufacture and distribution of allegedly adulterated drugs made at two Ranbaxy facilities in India. A drug is deemed to be “adulterated” if it is not manufactured or processed in accordance with Good Manufacturing Practice (“GMP”) regulations. According to the Justice Department, the drugs at issue are Sotret, gabapentin and ciprofloxacin produced at Ranbaxy’s facilities in Paonta Sahib and Dewas, India.

The federal Food, Drug and Cosmetic Act (“FDCA”) prohibits the sale of any drug that is adulterated. Ranbaxy USA pleaded guilty to violating the FDCA and making material false statements to the Food and Drug Administration. In connection with the plea deal, Ranbaxy USA will pay a $130 million criminal fine and forfeit an additional $20 million.

In addition to the criminal plea agreement, Ranbaxy agreed to pay $350 million to resolve allegations that it caused false claims to be submitted to Medicare, Medicaid, TRICARE and other government health care programs. According to the Justice Department, Ranbaxy manufactured and distributed drugs whose strength, quality, or purity deviated from the drugs’ specifications or that were not manufactured in accordance with GMP standards. As a result, the government claims that Ranbaxy knowingly caused false submissions to be made to government health care programs in violation of the False Claims Act.

The civil settlement resolves a whistleblower lawsuit brought under the qui tam provisions of the False Claims Act by Dinesh Thakur, a former executive of Ranbaxy. Thakur will receive approximately $48.6 million of the settlement proceeds as a reward under the qui tam provisions of the False Claims Act.