Fortune magazine alleges massive fraud by Ranbaxy

Generic drug manufacturer pled guilty to seven criminal charges in federal court

Fortune magazine has published an in-depth investigation of Ranbaxy Laboratories, the first foreign generics manufacturer to sell drugs in the United States, alleging massive fraud perpetrated by the company while making, testing, marketing, and selling its generic drugs worldwide. On May 13, Ranbaxy pleaded guilty to “seven federal criminal counts of selling adulterated drugs with intent to defraud, failing to report that its drugs didn’t meet specifications, and making intentionally false statements to the government,” the article reported. Ranbaxy will pay $500 million in civil and criminal fines under a settlement agreement with the U.S. Department of Justice.

Fabricated data and tainted drugs

Fortune’s investigation involved confidential Ranbaxy documents, including internal reports, memos, e-mails, FDA documents obtained through Freedom of Information Act requests, and court records, as well as interviews with former and current employees, scientists, public health experts, patient advocates, congressional investigators, and regulators.

In the article, “Dirty medicine,” Fortune reporter Katherine Eban profiled Dinesh Thakur, an engineer who began working in 2003 as Director of Research Information and Project Management for Ranbaxy’s global headquarters in Gurgaon, India. In 2004, Thakur learned from his boss, Rajinder Kumar, that the World Health Organization had found evidence of fabricated tests on HIV drugs Ranbaxy was selling to the South African government. Kumar, who had become Ranbaxy’s Head of Research and Development 2 months earlier, told Thakur to investigate “every drug, every market, every production line—and uncover the truth about Ranbaxy’s testing practices and where the company’s liabilities lay,” Eban wrote.

Eban reported that Thakur uncovered evidence of falsified and invented data intended to deceive FDA regulators and gain FDA approval for drugs that were often contaminated, substandard, or even counterfeited, and he reported his findings to Kumar, who in turn presented the evidence to senior executives. Both Kumar and Thakur repeatedly urged Ranbaxy to address and correct the problems but were met with silence, resistance, and worse.

“This was not something that was concealed,” Thakur explained to Eban. “[It was] common knowledge among senior managers of the company, heads of research and development, people responsible for formulation to the clinical people.” After initially trying to stay under the radar, saying he feared for his family’s safety, Thakur filed a whistleblower complaint in 2007. He will receive more than $48 million as part of the resolution of the case.

FDA’s culpability

Thakur has accused FDA of not acting quickly enough, explaining that it continued to approve Ranbaxy generics after he began informing the agency of the fraud. “For all the actions taken by federal authorities, there is a deeply troubling aspect to the government’s role in the saga of Ranbaxy,” Eban wrote. “Even as ever more details of the company’s long-running misconduct emerged, drug regulators permitted Ranbaxy to keep on selling many of its products … [and] granted Ranbaxy lucrative rights to sell new generic drugs.” For example, after an FDA inspection found tiny glass particles in atorvastatin, the generic version of Pfizer’s Lipitor, the agency gave the company only a temporary suspension, and Ranbaxy is still doing business in the United States, Eban noted.

The Ranbaxy fraud and FDA’s response to it raise “serious questions about whether our government can effectively safeguard a drug supply that last year was 84% generic, according to the IMS Institute for Healthcare Informatics, much of that manufactured in distant places,” Eban wrote.

Eighty percent of active pharmaceutical ingredients for all U.S. drugs and 40% of finished pills and capsules now come from foreign manufacturers, Eban reported, and Ranbaxy, the sixth-largest generic-drug maker in the country, garnered more than $1 billion in U.S. sales last year and $2.3 billion worldwide.