Pharmaceutical Fraud and Ranbaxy
By Jeffrey A. Newman Esq.
Eighty percent of all generic drugs taken in the United States are manufactured in a factory within a foreign nation and the market within our country for generic drugs exceeds $242 billion and is increasing each year. Ranbaxy, a generic drug manufacturer based in India was the first to sell drugs in the U.S. and is now the sixth largest generic drug maker in the country with more than $1 billion in sales here in 2012. Recently however, Ranbaxy pleaded guilty to seven federal criminal counts of making intentionally false statements to the FDA and agreed to pay $500 million in fines. Despite the clear criminal wrongdoing, none of the company executives face criminal penalties. The Ranbaxy back story is a sordid tale but it is also indicative of significant problems that the U.S. is facing in knowing the quality of the drugs in our stream of commerce and the difficulties in checking on drug manufacturing facilities abroad. To date most of the procedures are reliant on self reporting and simply assume the truthfulness of the information submitted—the honor system. Obviously in the case of Ranbaxy, the information was untrue and the drugs sold here adulterated and tainted.
The last report from the Government Accountability Office concerning foreign made drugs was issued in 2009 and it revealed that regulators inspect only 11% of foreign drug manufacturing plants. 40% of the domestic plants are inspected.
The incredible fraud by Ranbaxy executives was first revealed to our government by a whistleblower working at the company, Dinesh Thakur. Thakur was the director of research information and project management. Back in 2004, he observed several irregularities in Ranbaxy’s drug applications including lying to regulators and forging documents. The company produced data suggesting that its processes were clean and working but that data was constructed and false. Company scientists told Thakur that they were directed to substitute cheaper, lower-quality ingredients in place of better ingredients to obtain certain results on tests. Often the data was just made up. For its HIV drugs, Ranbaxy was using ingredients that had failed purity tests.
Thakur and his boss tried to convince management within the company to change things and to cleans its operation and reveal the wrongdoing voluntarily to regulatory authorities. The company would not do so and finally he revealed the wrongdoing to the FDA. At one point during this period, Ranbaxy produced a generic form of Lipitor which it sold heavily in this country and it was found to contain glass particles. Those pills had been produced in the same Indian labs where the data was fabricated and reports altered.
While the $500 million settlement was high, it is not a lot of money for a company earning more than $1 billion a year from U.S. sales. It is unclear as to whether the FDA is able to regulate and control the drugs manufactured in other nations. This is an issue which Congress is presently examining. The fact that a whistleblower had to come forward to reveal the extensive fraud which was ongoing for years is an indicator that this is just a tip of the iceberg. Jeffrey Newman represents whistleblowers.