State Awarded $849K Settlement in Medicaid Fraud Case

Pharmaceutical manufacturer in India resolves impure drugs claims

BALTIMORE—Attorney General Douglas F. Gansler announced on May 14 that Maryland has joined with 49 other states and the federal government in a $500 million 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 Maryland’s Medicaid program.

“Nothing can be more important than the health and safety of our citizens,” said Attorney General Gansler. “This record settlement is an important victory for Maryland consumers who have every right to expect that the medicine they purchase is of the highest possible quality and meets or exceeds all federal standards.”

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 Food and Drug Administration. The case involved 26 generic pharmaceutical products manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas, India, between April 1, 2003, and September 16, 2010.

Ranbaxy has agreed to pay the states and the federal government $350 million in civil damages and penalties to resolve civil allegations or poor manufacturing practices in the two manufacturing plants. More than $266 million will go to the Medicaid program, which is jointly funded by the states and federal government. Of that, Maryland will receive $849,259.66. The remaining $83 million is designated for other federal health care programs affected by Ranbaxy’s conduct.

Additionally, Ranbaxy USA, a subsidiary, has pled guilty to seven felony counts alleging violations of the U.S. Food, Drug and Cosmetic Act, and has agreed to pay $150 million in criminal fines and forfeitures. Also, Ranbaxy Laboratories Ltd., 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. These provisions include a wide range of actions to correct its violations and to ensure they do not occur again.

A team from the National Association of Medicaid Fraud Control Units conducted the settlement negotiations with Ranbaxy on behalf of the states and included representatives from the Offices of the Attorneys General in New York, California, South Carolina, Maryland and Oregon. In announcing the settlement, Attorney General Gansler thanked Medicaid Fraud Control Unit Chief Auditor Ruth Jarrell for her work on this case.

Source: Office of Attorney General Douglas F. Gansler

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