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Ranbaxy's $500 million settlement for producing adulterated drugs and fradulent data provides a cautionary tale for patients, FDA, and drug manufacturers.
In mid-May, Ranbaxy Laboratories Limited, India's largest pharmaceutical company, pleaded guilty to US Department of Justice felony charges relating to the manufacture and distribution of adulterated drugs made at two of the company's manufacturing facilities in India. The company agreed to pay $500 million—the largest financial penalty paid by a generic pharmaceutical company—for violations of the US Food, Drug and Cosmetic Act (FDCA) and False Claims Act (FCA).
Ranbaxy agreed to pay a criminal fine and forfeiture totaling $150 million. It will pay another $350 million to settle civil claims that taxpayers paid for substandard drugs used in programs such as Medicare and Medicaid. A Ranbaxy press release explained "a previously disclosed investigation by the US Department of Justice (DOJ) of data integrity and manufacturing processes at certain Ranbaxy facilities in India has been concluded."
"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," Arun Sawhney, chief executive officer and managing director of Gurgaon, India-based Ranbaxy, said in the statement. "The conclusion of the DOJ investigation does not materially impact our current financial situation or performance."
Despite its confidence in the bottom line and a tagine of "Trusted Medicines. Healthier Lives." on its website, Ranbaxy USA pleaded guilty to three felony FDCA counts, and four felony counts of knowingly making material false statements to FDA, DOJ reports. The list of infractions shows problems dating to 2003. The company admitted to selling batches of adulterated drugs including Sotret, gabapentin, and ciprofloxacin; had incomplete testing records and inadequate programs to assess the stability characteristics of drugs; and had significant cGMP deviations in the manufacture of certain APIs and finished products.
The DOJ reports Ranbaxy USA was aware in January 2003 that a batch of Sotret failed an accelerated dissolution stability test but continued to distribute the batch into the US for another 13 months. At various times between June and August 2007, certain batches of gabapentin were testing out-of-specification, had unknown impurities, and would not maintain their expected shelf life; the company did not notify FDA or institute a voluntary recall until October 2007.
However, the Ranbaxy and DOJ statements tell only part of the story. An investigative report by Fortune magazine details "long-term criminal fraud" at Ranbaxy, and FDA's response to it " ... raises serious questions about whether our government can effectively safeguard a drug supply that last year was 84% generic ..." The article, based on interviews with former Ranbaxy employees, internal documents, regulators, and scientists, describes a pattern of invented data, falsified documents, a lack of testing, and ignorance and disregard of regulatory procedures (1).
The article reports that some former Ranbaxy executives and FDA inspectors with knowledge of the company's manufacturing practices would not take the company's drugs. Patients did not have insider knowledge of the manufacturing problems, but trusted the medicine and the regulatory channels; some may have paid a high price for the ineffective drugs. That's a violation of trust that the drug industry and FDA must resolve.
Rita Peters is the editorial director of BioPharm International.
1. Katherine Eban, "Dirty Medicine" www.fortune.com, accessed May 20, 2013.