Ranbaxy pleads guilty, to pay $500 mln in settlement

Tue May 14, 2013 3:42am IST

1 of 2. An art handler places drugs for the art installation 'In this terrible moment we are victims clinging helplessly to an environment that refuses to acknowledge the soul' by British artist Damien Hirst in the new Brandhorst modern art museum in Munich, May 6, 2009.

Credit: Reuters/Alexandra Beier/Files

Related Topics

Stocks

   
Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

REUTERS - Generic drugmaker Ranbaxy Laboratories Ltd(RANB.NS) pleaded guilty on Monday to felony charges related to drug safety and will pay $500 million in civil and criminal fines under the settlement agreement with the U.S. Department of Justice.

The settlement is its largest-ever with a generic drugmaker over drug safety, according to the U.S. government. It includes $150 million in payments for a criminal fine and forfeiture and $350 million in payments for civil claims.

The settlement has been in the works for some time. In December 2011, Ranbaxy set aside $500 million to resolve the potential criminal and civil liabilities related to the investigation by the government into its manufacturing practices and falsifying data.

The company reached a related settlement agreement with the U.S. Food and Drug Administration in 2011.

"The financial provision Ranbaxy established in December 2011 will be sufficient to cover all material financial obligations under the agreement," the company said in a news release announcing the conclusion of the U.S. investigation.

Ranbaxy USA pleaded guilty to three felony counts related to the manufacture of drugs at two Indian locations that did not meet safety standards and to four counts of making material false statements.

In the civil settlement, Ranbaxy has agreed to pay $350 million to resolve allegations that drugs from the two Indian plants did not meet specifications and that false claims were submitted to U.S. government healthcare programs between April 1, 2003 and September 16, 2010.

In 2008, the FDA banned the company from selling about 30 drugs in the United States after it found manufacturing deficiencies at facilities in India. In 2009, the FDA had accused the company of falsifying data and test results in drug applications and halted reviews of drugs made at a plant in northern India.

Dinesh Thakur, former Ranbaxy director and global head of research information & portfolio management, is entitled to $48.6 million as the whistleblower in the case, the Justice Department said. It was Thakur who uncovered the unsafe practices and violations at Ranbaxy.

"Ranbaxy's management was notified of these widespread problems. When they failed to correct the problems, it left me with no choice but to alert healthcare authorities," Thakur said in a statement.

"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," he added.

Ranbaxy, majority-owned by Japan's Daiichi Sankyo Co Ltd (4568.T), stopped selling drugs to the U.S. markets while it fixed problems with its manufacturing procedures in the United States and India.

"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," Ranbaxy Chief Executive Arun Sawhney said in a statement.

"The conclusion of the DOJ investigation does not materially impact our current financial situation or performance," he added.

The company has since grappled with other manufacturing problems. In November 2012 it recalled some generic Lipitor, known as atorvastatin, in the United States after certain batches were found to contain glass particles. It has since resumed manufacturing the widely used cholesterol lowering medicine.

(Reporting by Caroline Humer and Bill Berkrot in New York; editing by Matthew Lewis and Phil Berlowitz)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Monsoon Forecast

Monsoon Forecast

South Asia monsoon seen below-average to average in 2014 - WMO.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Facebook Earnings

Facebook Earnings

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

DLF Shares

DLF Shares

DLF slides 3 percent, underperforms rivals.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage