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Is Ranbaxy the Tip of the Iceberg?

As a result of a 2007 lawsuit initiated by a whistleblower under the US Federal False Claims Act, Ranbaxy USA has agreed to pay the United States Government and multiple state governments the sum of $350 million to resolve civil claims.

Ranbaxy USA - a subsidiary of Indian generic pharmaceutical manufacture Ranbaxy Laboratories - also plead guilty to three felony Food, Drug and Cosmetics Act counts, and four felony counts of knowingly making false statements to the US Food and Drug Administration.  Ranbaxy agreed to a criminal fine and forfeiture totaling $150 million.

The civil and criminal actions, and a lawsuit brought by the United States Department of Justice for Injunctive relief, arose out of allegations that Ranbaxy introduced adulterated drugs into commerce in violation of the US Food, Drug and Cosmetics Act. According to the  Justice Department’s claim for injunctive relief, ‘drugs not manufactured, processed, packed, or held in conformance with current good manufacturing practice are deemed adulterated as a matter of law, without any showing of actual defect’.  The allegations specifically stemmed from Ranbaxy’s alleged derelictions at its manufacturing facilities based in India.  


'Criminal information'


Criminal information, detailing the specific charges of wrongdoing, filed in the United States District Court for the District of Maryland against Ranbaxy alleges that processing derelictions at the company’s facilities in India were documented through FDA inspections dating back to February, 2006.  The Justice Department’s 'criminal information' alleges that Ranbaxy’s own consultants noted process derelictions as early as October, 2003.     

Ranbaxy manufactures the drugs Cefaclor, Cefadroxil, Amoxicillin, and Amoxicillin and Clavulanate Potassium.  In announcing the settlement, the US Attorney for the District of Maryland, Rod J Rosenstein, noted that this is the ‘nation’s largest financial penalty paid by a generic pharmaceutical company for FDCA violations’.  
The False Claims recovery will return money to the Federal and State Treasuries as a result of expenditures on adultured drugs by the Medicare, Medicaid and the Tri-Care (military) health systems. Whistleblower Dinesh S Thakur will receive a bounty of at least $48 million from just the federal share of the proceeds.  



Bounty system


According to his whistleblower lawsuit filed under the False Claims Act, from June 2003 until April 2005, Relator [Thakur] was the Director of Product and Information Management with Defendant Ranbaxy Laboratories Limited in Gurgaon, Haryana, India.
The Ranbaxy matter is yet another example of the long arm of the US Food, Drug and Cosmetics Act and the application of the False Claims Act where non-domestic adulterated products are purchased with US and State Government monies.  

While the whistleblower Thakur was a citizen of the United States, non-citizens, including individuals who have never set foot in the United States, can avail themselves of the bounty system provided by the US False Claims Act, the Dodd-Frank Act, and the Internal Revenue Service Regulations. The US bounty system has been a catalyst for large recoveries as it has expanded the number of eyes that are available to monitor corporate compliance.



Tip of the iceberg



With US drug manufacturers taking their production and drug trials overseas to places like India and China, the Ranbaxy case should be a wakeup call for companies that are of the mindset that what happens outside of the United States stays outside of the United States. And, for those working in foreign pharmaceutical plants or participating in the implementation of drug trials abroad, Ranbaxy is a reminder that remedies may exist in the United States when protocol derelictions occur abroad.  Undoubtedly, the Ranbaxy case may be the tip of the iceberg in terms of future actions against foreign drug manufacturers that produce products paid for by US Government health systems.

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20 May 2013

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