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Drug manufacturer Ranbaxy USA Inc. agrees to $500 million penalty

Published May 13, 2013 12:59 pm

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

WASHINGTON • A subsidiary of India's largest pharmaceutical company has agreed to pay $500 million in fines and civil penalties for selling adulterated drugs and lying about tests of the medications to federal regulators, the U.S. Justice Department said Monday.

Prosecutors said the guilty plea by Ranbaxy USA Inc. represents the largest financial penalty by a generic drug company for violations of the Federal Food, Drug and Cosmetic Act, which prohibits the sale of impure drugs.

The subsidiary of Ranbaxy Laboratories Limited admitted that it made and sold impure drugs at two manufacturing sites in India. The batches of adulterated drugs, whose strength, purity or quality differed from the specifications, included generic versions of an antibiotic and other medications used to treat severe acne, epilepsy and nerve pain, prosecutors said.

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."

"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 Arun Sawhney said in a statement.

The company agreed to a fine and forfeiture of $150 million as well as an additional $350 million penalty to settle civil claims that it submitted false statements to Medicaid, Medicare and other government health care programs. About $49 million of that penalty will go to a former Ranbaxy executive who acted as a whistleblower, prosecutors said.

The company also admitted making false statements to the Food and Drug Administration about dates of stability testing, which detect impurities of a drug and determines appropriate storage conditions of it. In some cases, the tests were done months after the company had said they'd been performed, or were done on the same day — or within days of each other — instead of months apart.