Attorney General Kathleen G. Kane announced today that Pennsylvania has joined with other states and the federal government in a $500 million settlement to resolve civil and criminal allegations that Ranbaxy, a pharmaceutical manufacturer based in India, introduced adulterated drugs into interstate commerce. As a result, false or fraudulent claims were submitted to Pennsylvania’s Medicaid Program.
The investigation resulted from a lawsuit filed in the United States District Court for the District of 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 drugs whose strength, purity and/or quality fell below the standards required by the FDA. The products at issue consisted of 26 generic pharmaceutical products manufactured at facilities in Paonta Sahib and Dewas, India, at various times between April 1, 2003 and September 16, 2010.
Ranbaxy has agreed to pay the states and the federal government $350 million in civil damages and penalties to resolve civil allegations of poor manufacturing practices. $266 million of this amount will go to Medicaid programs, which are funded jointly by the states and the federal government.
Pennsylvania’s Medicaid program, with federal matching funds added, will receive $4.5 million as a result of the settlement. The remaining $83 million is designated for other federal health care programs affected by Ranbaxy’s conduct. Additionally, Ranbaxy USA, a subsidiary, has pleaded guilty to seven felony counts alleging violations of the U.S. Food, Drug, and Cosmetic Act, and has agreed to pay $150 million in criminal fines and forfeitures. Also, Ranbaxy entered into a consent decree in January 2012 with the federal government to address outstanding current good manufacturing practice and data integrity issues. 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.