A pharmaceutical manufacturer has pleaded guilty to felony charges that it distributed adulterated drugs in the United States, agreeing to pay $500 million in fines and settlement claims that are expected to yield Maryland nearly $850,000.
Ranbaxy USA Inc., a subsidiary of the Indian company Ranbaxy Laboratories Ltd., pleaded guilty to three felony violations of the federal Food, Drug and Cosmetic Act and four felony counts of making false statements to the Food and Drug Administration, federal prosecutors announced Monday.
The introduction of the impure drugs into interstate commerce resulted in false or fraudulent claims being submitted to Maryland’s Medicaid program, according to the office of Attorney General Douglas Gansler.
The company admitted to shipping batches of drugs including sotret, used to treat severe acne; gabapentin, used to treat epilepsy; and ciprofloxacin, an antibiotic, that were adulterated — meaning they had not been manufactured, processed or packaged according to regulations.
The company also failed to file timely reports about batches that had failed stability and purity tests and making false statements in its annual report, according to the plea agreement.
Arun Sawhney, Ranbaxy’s CEO, said in a statement that Monday’s announcement marked the resolution of a past issue, and that while the company was disappointed by its past conduct, it would continue bringing safe and effective products to the U.S.
The company signed a 2011 consent decree with the U.S. Food and Drug Administration committing to strengthening procedures to comply with good manufacturing practices, according to its website.
Ranbaxy USA has agreed to pay a $130 million criminal fine and forfeit another $20 million, as well as pay a $231.8 million settlement to the federal government and a total of $118.2 million to the 50 states, which participated in the agreement.
The criminal and civil cases were handled by the office of the U.S. attorney for the district of Maryland, Rod J. Rosenstein.
The complaint is the largest false claims case prosecuted in Maryland federal court, and the largest penalty ever paid in the country by a generic pharmaceutical company for such violations, Rosenstein said in a statement Monday.
Under the terms of the federal False Claims Act, the federal share of the settlement also includes a $48.6 million payment to a former Ranbaxy USA executive who acted as a whistleblower.
The states’ share of the settlement will be paid to the office of the attorney general in New York state before being disbursed to the other states.
Maryland is set to receive $849,259.66 of the settlement, which dealt with claims made under Maryland’s False Health Claims Act, as well as under the federal law, according to a spokesman for Gansler’s office.
The settlement also underscores the need for Maryland to strengthen its false claims law, which is currently limited to claims against the state or under a state health care plan, said Del. Sam Arora (D-Dist. 19) of Silver Spring. Arora proposed a broader false claims law during this year’s General Assembly session, but it died in committee.
Such a law could protect a broad range of state money in areas such as construction and procurement, not just what was related to health care, Arora said.
As proposed, the expanded law would have required offenders to pay up to three times the damages to the government, as well as a $10,000 fine for each violation. It also would have included protections for whistleblowers, who are essential to exposing fraud, Arora said.
Arora plans to continue advocating for the bill, and said the House Judiciary Committee might hold a special hearing on the matter this summer.