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Department of Justice Announces Largest Ever Drug Safety Settlement with a Generic Drug Manufacturer—$500 Million

Earlier this month, the Department of Justice announced a $500 million settlement it reached with Ranbaxy USA Inc., a subsidiary of the Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited.  The settlement resolves both criminal and civil allegations filed against Ranbaxy.  As a part of the settlement, the company agreed to pay $350 to resolve False Claims Act allegations, agreed to pay criminal fines totaling $150 million, and pleaded guilty to seven felony charges relating to the manufacture and distribution of various drugs made at two of its manufacturing facilities in India.

As part of the civil charges brought against Ranbaxy, the company was accused of submitting false claims to federal and state health care programs for drugs manufactured at two of its facilities in Paonta Sahib and Dewas, India.  Ranbaxy allegedly manufactured, distributed and sold drugs whose formulations or specifications did not comply with the FDA-approved manufacturing requirements.  These Ranbaxy drugs, that allegedly were not up-to-par and should not have been sold in the United States, were then sold to federal and state health care patients.  As a result, Ranbaxy was accused of submitting false claims to numerous government agencies including the FDA, Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and USAID.

The criminal settlement also relates to the poor oversight and inadequate testing and maintenance of drugs manufactured at the Paonta Sahib and Dewas facilities.  Under the federal Food, Drug, and Cosmetic Act (“FDCA”), a company cannot introduce into interstate commerce any drug that has been adulterated.  Because the Paonta Sahib and Dewas facilities did not comply with various federal regulations and requirements, the drugs manufactured there did not comply with the FDCA.

The whistleblower in this case was Mr. Dinesh S. Thakur.  Mr. Thakur was a former Ranbaxy Director and Global Head, Research Information & Portfolio Manager.  When Mr. Thakur initially learned of the fraud, he tried reporting his findings to company management who failed to take any corrective action.  As a result, Mr. Thakur left Ranbaxy in 2005 and began to develop his case to report to the government.  Mr. Thakur’s information and help with the investigation allowed the government to reach this amazing settlement.  Mr. Thakur will receive 21% of the federal and participating states’ civil settlement, approximately $48.6 million.

The attorneys at Tycko & Zavareei applaud Mr. Thakur’s bravery and persistence.  And all whistleblowers should be encouraged by the substantial reward he received as a result of his efforts.

If you are aware of a company committing fraud, you need to take action like Mr. Thakur in order to stop it. For more information on how to find a qui tam law firm to represent you, please call (202) 973-0900 or fill out a Confidential Case Evaluation form.