A.G. Schneiderman Announces Pharmaceutical Giant To Pay $500 Million Penalty For Selling Drugs That Fell Below FDA Standards

NEW YORK - Attorney General Eric T. Schneiderman announced today that New York helped lead the negotiation of a national, $500 million settlement with a giant generic pharmaceutical manufacturer based in India. The settlement with Ranbaxy resolved civil and criminal allegations that introduced generic drugs that lacked necessary active ingredients due to poor quality control standards into interstate commerce. As part of the settlement, Ranbaxy will return $44 million to New York’s Medicaid programs.

“Pharmaceutical companies that manufacture and distribute worthless pills harm patients and abuse our Medicaid programs,” said Attorney General Schneiderman. “Under this national settlement, Ranbaxy’s flagrant violation of America’s drug standards will stop, they will pay civil and criminal penalties, and their US subsidiary has pled guilty to numerous felony charges in federal court.”

The investigation stemmed from a whistleblower lawsuit filed in federal court in Maryland under the federal False Claims Act and various state false claims statutes. The whistleblower’s complaint alleged that Ranbaxy knowingly manufactured, distributed and sold generic pharmaceutical products in the United States and that the strength, purity and quality of those drugs fell below standards required by the FDA. The products at issue consisted of 26 generic pharmaceutical drugs manufactured at Ranbaxy’s facilities in India at various times between April 1, 2003 and September 16, 2010. The drugs included Amoxicillin, a common antibiotic, and Fenofibrate, used to reduce high cholesterol.

The whistleblower suit was filed 2007 in the United States District Court for the District of Maryland.

Ranbaxy has agreed to pay the states and the federal government $350 million dollars in civil damages and penalties to resolve civil allegations of poor manufacturing practices in two Indian manufacturing plants, in Paonta Sahib and Dewas. Of this amount, $266,729,715.10 will be returned to the state Medicaid programs, which are funded jointly by the states and the federal government. The remaining $83,270,284.86 is designated for other federal health care programs affected by Ranbaxy’s conduct. The total portion of the settlement amount recovered by New York is $43, 882,807.70.

Additionally, Ranbaxy USA, a subsidiary, has pled guilty to seven felony counts alleging violations of the U.S. Food, Drug, and Cosmetic Act and has agreed to pay $150 million dollars in criminal fines and forfeitures in the United States District Court for the District of Maryland. Ranbaxy entered into a consent decree in January 2012 with the federal government to address outstanding current good manufacturing practice (cGMP) and data integrity issues in the two Indian manufacturing plants at issue. These provisions include a wide range of actions to correct its violations and to ensure that the violations do not occur again.

A team from the National Association of Medicaid Fraud Control Units (NAMFCU) conducted the settlement negotiations with Ranbaxy on behalf of the states and included representatives from the Offices of the Attorneys General for the states of New York, California, South Carolina, Maryland and Oregon.

The New York team consisted of Jay Speers, Counsel to MFCU and Meghan Collins, Associate Special Auditor Investigator. It was supervised by Deputy Attorney General Monica Hickey-Martin, Director of the Medicaid Fraud Control Unit, and Executive Deputy Attorney General for Criminal Justice Kelly Donovan.