* Largest drug safety settlement with generic maker -U.S.
* Settlement includes $350 mln in civil claims payment
* Two Indian plants failed to meet safety standards
* Ranbaxy says money set aside sufficient to cover costs
May 13 (Reuters) - Indian generic drugmaker Ranbaxy
Laboratories Ltd pleaded guilty on Monday to felony
charges related to drug safety and will pay $500 million in
civil and criminal fines under the settlement agreement with the
U.S. Department of Justice.
The settlement is its largest-ever with a generic drugmaker
over drug safety, according to the U.S. government. It includes
$150 million in payments for a criminal fine and forfeiture and
$350 million in payments for civil claims.
The settlement has been in the works for some time. In
December 2011, Ranbaxy set aside $500 million to resolve the
potential criminal and civil liabilities related to the
investigation by the government into its manufacturing practices
and falsifying data.
The company reached a related settlement agreement with the
U.S. Food and Drug Administration in 2011.
"The financial provision Ranbaxy established in December
2011 will be sufficient to cover all material financial
obligations under the agreement," the company said in a news
release announcing the conclusion of the U.S. investigation.
Ranbaxy USA pleaded guilty to three felony counts related to
the manufacture of drugs at two Indian locations that did not
meet safety standards and to four counts of making material
In the civil settlement, Ranbaxy has agreed to pay $350
million to resolve allegations that drugs from the two Indian
plants did not meet specifications and that false claims were
submitted to U.S. government healthcare programs between April
1, 2003 and Sept. 16, 2010.
In 2008, the FDA banned the company from selling about 30
drugs in the United States after it found manufacturing
deficiencies at facilities in India. In 2009, the FDA had
accused the company of falsifying data and test results in drug
applications and halted reviews of drugs made at a plant in
Dinesh Thakur, former Ranbaxy director and global head of
research information & portfolio management, is entitled to
$48.6 million as the whistleblower in the case, the Justice
Department said. It was Thakur who uncovered the unsafe
practices and violations at Ranbaxy.
"Ranbaxy's management was notified of these widespread
problems. When they failed to correct the problems, it left me
with no choice but to alert healthcare authorities," Thakur said
in a statement.
"It took us eight years to help government authorities
unravel a complicated trail of falsified records and dangerous
manufacturing practices that threatened to compromise the
quality and safety of Ranbaxy drugs," he added.
Ranbaxy, majority-owned by Japan's Daiichi Sankyo Co Ltd
, stopped selling drugs to the U.S. markets while it
fixed problems with its manufacturing procedures in the United
States and India.
"While we are disappointed by the conduct of the past that
led to this investigation, we strongly believe that settling
this matter now is in the best interest of all of Ranbaxy's
stakeholders," Ranbaxy Chief Executive Arun Sawhney said in a
"The conclusion of the DOJ investigation does not materially
impact our current financial situation or performance," he
The company has since grappled with other manufacturing
problems. In November 2012 it recalled some generic Lipitor,
known as atorvastatin, in the United States after certain
batches were found to contain glass particles.
It has since resumed manufacturing the widely used cholesterol