AEGiS-WSJ: Ranbaxy Probe Extends to Africa Drugs

Important note: Information in this article was accurate in 2008. The state of the art may have changed since the publication date.

Ranbaxy Probe Extends to Africa Drugs

Wall Street Journal - July 15, 2008
John R. Wilke at john.wilke@wsj.com

WASHINGTON -- Ranbaxy Inc., India's largest pharmaceutical company and among the world's biggest generic-drug makers, faces a U.S. investigation into whether it manufactured substandard generic drugs, including allegations that it made weak or adulterated HIV drugs that were given to thousands of AIDS patients in Africa.

Ranbaxy was paid millions of dollars through U.S. government contracts to provide low-cost antiretroviral drugs under the president's emergency plan for AIDS relief. Investigators at the Justice Department and Food and Drug Administration allege that some of the drugs were poorly made, unstable or impotent. According to court filings and lawyers close to the investigation, Ranbaxy fabricated documents to cover up the substandard products.

Ranbaxy shares fell more than 10% Monday in London trading after it issued a statement acknowledging the probe from its Gurgoan, India, headquarters. Details of the inquiry, which haven't previously been disclosed, raise difficult questions for the company in the wake of its recent $4.6 billion sale of a majority stake to Daiichi Sankyo Co. of Japan, and a separate pact with Pfizer Inc. reached in June to license a generic version of Pfizer's blockbuster cholesterol drug Lipitor.

In a filing Monday in federal court in Maryland, Ranbaxy said it is cooperating with investigators and will turn over disputed documents sought by the U.S. The company also said the sale of the company and its licensing agreements aren't affected by the U.S. probe.

In the filing, Ranbaxy acknowledged "some serious allegations concerning compliance with U.S. law" but the filing said that "except for issues that have been fully aired with the government, Ranbaxy knows of no evidence to support these allegations." A company spokesman, Chuck Caprariello, declined to elaborate.

In a July 3 court filing, U.S. investigators said the probe involves "a pattern of systematic fraudulent conduct" including allegations of health-care fraud, contract fraud, false claims and fabrication of documents. The filings were intended to force Ranbaxy to release audits of its plants conducted by a consultant; the company had argued that the audits were privileged.

Prosecutors also told the court that Ranbaxy routinely lied to the FDA about the formulation of its generic drugs, which include a version of Zocor, Merck & Co's best-selling cholesterol pill. No formal charges have been filed against the company.

In February 2006, FDA agents inspected a Ranbaxy plant in Paonta Sahib, India, and uncovered quality problems, according to warning letters sent by the FDA to Ranbaxy. Feb. 14 last year, agents of the FDA and Federal Bureau of Investigation raided Ranbaxy's U.S. offices in Princeton and South Brunswick, N.J.

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