Attorney General Peter F. Kilmartin announced today that Rhode Island has joined with other states and the federal government in a $500 million dollar settlement to resolve civil and criminal allegations that Ranbaxy, a generic pharmaceutical manufacturer based in Gurgaon, India, introduced adulterated drugs into interstate commerce. As a result false or fraudulent claims were submitted to Rhode Island's Medicaid Program. The total portion of the settlement amount recovered by Rhode Island is $290,600.
The investigation resulted from a qui tam action 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 pharmaceutical products – 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 its 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 dollars in civil damages and penalties to resolve civil allegations of poor manufacturing practices in two Indian manufacturing plants. $266,729,715.10 of this amount will go to the Medicaid programs, which is funded jointly by the states and the federal government.
"With Medicaid being one of the greatest costs to states, it is imperative that each dollar is spent properly, and not diverted by providing substandard medications to unknowing providers and patients," said Attorney General Kilmartin.
The remaining $83,270,284.86 is designated for other federal health care programs affected by Ranbaxy's conduct. Additionally, Ranbaxy USA, a subsidiary, has pled guilty to seven (7) felony counts alleging violations of the U.S. Food, Drug, and Cosmetic Act, and has agreed to pay $150 million dollars 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 in the two Indian manufacturing plants at issue. These provisions include a wide range of actions to correct its violations and to ensure that the violations do not occur again.