For Immediate Release - May 13, 2013

Drug Manufacturer to Pay $2.65 Million to Massachusetts Medicaid Program as Part of National Healthcare Fraud Settlement

India-Based Ranbaxy to Pay a Total of $500 Million to Federal and State Authorities for Selling Adulterated Drugs; United States Subsidiary Pleaded Guilty to Federal Criminal Charges

BOSTON – A generic drug manufacturer from India has agreed to pay more than $2.65 million to the state’s Medicaid program to resolve civil and criminal allegations that it knowingly manufactured and sold generic drugs that did not meet Food and Drug Administration (FDA) standards, Attorney General Martha Coakley announced today.   

As part of a national healthcare fraud settlement, Ranbaxy Laboratories Limited (Ranbaxy), based in Gurgaon, India, will pay a total of $500 million to federal and state authorities, also resolving allegations that it made false representations to the FDA. Its United States subsidiary based in Delaware – Ranbaxy USA, Inc. – has pleaded guilty to federal criminal charges based on the same conduct.

“FDA standards exist to ensure that drugs sold in the United States are safe and effective for consumers,” AG Coakley said. “Our office is committed to working with our partners in federal and state law enforcement nationwide to make sure these corporations adhere to standards within the pharmaceutical industry.”

As part of the settlement – the result of a whistleblower lawsuit filed in federal court in Maryland – Ranbaxy will pay close to $350 million in civil damages and penalties to compensate state and federal healthcare programs for financial harms allegedly suffered as a result of the illegal conduct.  This includes approximately $266 million to be returned to Medicaid programs nationwide and approximately $83 million to be returned to other federally-funded health care programs.

Ranbaxy will pay more than $2.65 million to the Medicaid program in Massachusetts, which provides funds for health care products and services to eligible low-income individuals, including people with disabilities, children and elder citizens. 

Ranbaxy USA will also pay $150 million in criminal fines and forfeitures after pleading guilty to seven felony counts of violating the U.S. Food, Drug, and Cosmetic Act and making false statements to the federal government.

The civil settlement and criminal plea involve 26 of Ranbaxy’s generic pharmaceutical drugs and resolve allegations that, between 2003 and 2010, Ranbaxy:

  • Manufactured and sold drugs that were not of the strength, purity, and/or quality required by the FDA; 
  • Did not comply with FDA-mandated manufacturing practices in plants located in Paonta Sahib, India and Dewas, India; and
  • Made false statements to the FDA concerning its manufacturing practices and the strength, purity, and/or quality of it drugs.  

In 2012, Ranbaxy entered into a consent decree with the federal government to address manufacturing practices and data integrity issues at two Indian manufacturing plants.  These provisions include a wide range of actions to correct Ranbaxy’s violations and to ensure that the violations do not occur again. 

The settlement is the result of investigations initiated by the U.S. Attorney’s Office for the District of Maryland and the Civil Frauds Division of the U.S. Department of Justice and conducted with the assistance of several state attorneys general. 

In recognition of AG Coakley’s efforts to combat fraud and recover money for taxpayers, the AG’s Medicaid Fraud Division was awarded the 2011 State Medicaid Fraud Control Unit Award by the Office of Inspector General of the United States Department of Health and Human Services. In 2012, the AG’s Office recovered a record $85.6 million for the state Medicaid program.

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