Generic Drug Manufacturer to Pay $500 Million to Resolve FCA and Criminal Allegations

In the largest drug safety settlement ever by a generic drug manufacturer, Ranbaxy USA, Inc. (“Ranbaxy”), a subsidiary of the Indian generic drug manufacturer Ranbaxy Laboratories Limited, agreed to pay $500 million to resolve a whistleblower lawsuit and criminal charges that it manufactured and distributed adulterated drugs which it sold in the U.S.  Specifically, Ranbaxy manufactured drugs at two of its facilities in India did not use proper methods for manufacturing, processing, packaging, and holding in violation of the Current Good Manufacturing Practice (“CGMP”) regulations.

As part of the $500 million settlement, Ranbaxy agreed to pay $350 million to settle allegations brought under qui tam provisions of the False Claims Act (“FCA”) that it submitted false claims to federal and state health care programs for generic drugs that did not meet required specifications for strength, purity, or quality or that were not manufactured in accordance with the FDA approved formulation. The case, U.S. ex rel. Thakur v. Ranbaxy Laboratories Limited, Case No. JFM-07-962 (D. Md.), was filed under seal in the U.S. District Court for the District of Maryland by Dinesh Thakur, a former executive with Ranbaxy.  Of the $350 million settlement, the federal government’s share is $231.8 million with $118.2 million going to the states participating in the settlement. The whistleblower who brought the lawsuit, Dinesh Thakur, will receive $48.6 million as his share of the federal portion of the recovery.

In the related criminal settlement, Ranbaxy agreed to pay a criminal fine of $130 million, forfeit another $20 million, and plead guilty to felony charges that it violated the Food Drug and Cosmetics Act (“FDCA”) for manufacturing and distributing adulterated drugs into interstate commerce and for knowingly making false statements to the FDA.

The U.S. Attorney’s Office for the District of Maryland and the Civil Division’s Commercial Litigation Branch negotiated the civil settlement.

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