Playing with Life: The Ranbaxy Fraud

India's pharmaceutical sector comprises some of the largest generic drug makers, like Cipla, Sun Pharma, Ranbaxy, and Dr Reddy's. 

A few weeks back, Ranbaxy, which is owned by Japanese pharma giant Daiichi Sankyo, was slapped with a massive U.S.$500-million penalty by the U.S. government. The company agreed to pay the hefty penalty to settle a criminal and civil lawsuit which leveled charges of falsifying data from its drug facilities and shoddy manufacturing practices against it. The penalty is said to be the largest one ever imposed on a generic drug maker. 

The company's shoddy manufacturing practices were brought to light by one of its former employees, Dinesh Thakur, who worked as director of research information and project management. For his efforts, he was awarded U.S.$48 million (Rs 244 crore) as part of the settlement. 

The U.S. Justice Department said that, "Ranbaxy Laboratories, pleaded guilty to felony charges relating to the manufacture and distribution of certain adulterated drugs made at two of Ranbaxy's manufacturing facilities in India". 

In fact, the company pleaded guilty on account of three violations of the U.S.'s Food, Drug and Cosmetic Act (FDCA), and accepted that it deliberately lied to the U.S. Food and Drug Administration (FDA). The faulty generic drugs were manufactured at Ranbaxy's facilities in Paonta Sahib and Dewas. Ranbaxy USA admitted to introducing select batches of adulterated drugs that were produced at Paonta Sahib in 2005 and 2006.

Forbes has an investigative piece on the Ranbaxy fraud. Here's an excerpt:

In August 2004, Dinesh Thakur confronted his assignment to investigate possible fraud at his own company, Thakur gave each of his project managers a part of the world and asked them to compare Ranbaxy's manufacturing data against the claims made to regulators. His own efforts began with a visit to a company regulatory official.

It was a depressing conversation. The official explained, Thakur says, that the company culture was for management to dictate the results it wanted and for those beneath to bend the process to achieve it. He described how Ranbaxy took its greatest liberties in markets where regulation was weakest and the risk of discovery was lowest. He acknowledged there was no data supporting some of Ranbaxy's drug applications in those regions and that management knew that, according to Thakur.

... in Gurgaon, as Thakur's project managers gathered data and interviewed company scientists and executives, he says, they stumbled onto Ranbaxy's open secret: The company manipulated almost every aspect of its manufacturing process to quickly produce impressive-looking data that would bolster its bottom line. "This was not something that was concealed," Thakur says. It was "common knowledge among senior managers of the company, heads of research and development, people responsible for formulation to the clinical people."

Lying to regulators and backdating and forgery were commonplace, he says. The company even forged its own standard operating procedures, which FDA inspectors rely on to assess whether a company is following its own policies. Thakur's team was told of one instance in which company officials forged and backdated a standard operating procedure related to how patient data are stored, then aged the document in a "steam room" overnight to fool regulators.

Company scientists told Thakur's staff that they were directed to substitute cheaper, lower-quality ingredients in place of better ingredients, to manipulate test parameters to accommodate higher impurities, and even to substitute brand-name drugs in lieu of their own generics in bioequivalence tests to produce better results.

It just numbs the mind to know the dirty secrets of this pharma company's manufacturing practices. You can read the complete Forbes piece here.