Ranbaxy Laboratories Ltd yesterday agreed to pay a record $500 million fine to settle a US civil and criminal lawsuit brought on by a whistle-blower and the US regulator.
The fine, which includes $150 million in criminal fine and forfeiture and $350 million in payments for civil claims, is the largest-ever imposed on a generic drugmaker over drug safety, the US Department of Justice (DoJ) said.
In 2008, the US Food and Drugs Administration (FDA) had imposed a ban on 30 drugs being manufactured by Ranbaxy at its plant in Paonta Sahib for not meeting safety standards. (See: US FDA bans import of over 30 Ranbaxy generic drugs)
Although Ranbaxy has been hauled up for grave lapses in its manufacturing process, the US terms it as adulteration under its laws.
Under the US Food, Drug and Cosmetic Act (FDCA) law, 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 Good Manufacturing Practice regulations.
The federal suit was initially filed in Maryland in 2007 by whistleblower Dinesh Thakur, a former director and global head of research information and portfolio management at Ranbaxy.
Thakur said that during the course of his work at Ranbaxy, he discovered that the company falsified drug data and systemically violated current good manufacturing practices and good laboratory practices.
He alerted the US healthcare authorities after the company's management failed to correct these widespread problems.
"I worked with US regulatory authorities for two years to expose the fraud. In furtherance of this effort, I filed a lawsuit to hold Ranbaxy accountable. It took us eight years to help government authorities unravel a complicated trail of falsified records and dangerous manufacturing practices that threatened to compromise the quality and safety of Ranbaxy drugs,'' Thakur said in a statement.
Thakur will receive around $48.6 million (Rs266.6 crore) from the settlement amount.
Ranbaxy was charged with importing into the US certain batches of Sotret, gabapentin, and ciprofloxacin drugs that were produced at its Paonta Sahib facility in 2005 and 2006 with incomplete testing records and an inadequate program to assess the stability characteristics of the drugs.
Stability refers to how the quality of a drug varies with time under the influence of a variety of factors, such as temperature, humidity, and light. Such testing is used to determine appropriate storage conditions and expiration dates for the drug, as well as to detect any impurities in the drug.
Sotret is Ranbaxy's branded generic form of isotretinoin, a drug used to treat severe recalcitrant nodular acne, while gabapentin is a drug used to treat epilepsy and nerve pain and ciprofloxacin is a broad-spectrum antibiotic.
Ranbaxy, majority owned by Japan's Daiichi Sankyo, also acknowledged that the FDA's 2006 and 2008 inspections of its Dewas facility found the same issues with incomplete testing records and an inadequate stability program, as well as significant cGMP deviations in the manufacture of certain active pharmaceutical ingredients and finished 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," said, Arun Sawhney, CEO of Ranbaxy in a statement.
"The conclusion of the DOJ investigation does not materially impact our current financial situation or performance," he added.