Earlier this year, we noted that a new enforcement focus for the U.S. Department of Justice (DOJ) will be increased oversight to ensure compliance with the Food and Drug Administration’s (FDA) current good manufacturing practices (cGMPs) regulations. Specifically, Maame Ewusi-Mensah Frimpong, Deputy Assistant Attorney General (DAAG) for DOJ’s Consumer Protection Branch (CPB), noted her division has long worked closely with FDA to promote the safety of pharmaceutical products.
Several months later, it appears that DOJ is acting on this promise in two recent cases. As reported by the Washington Post, Reuters, and FiercePharmaManufacturing, “U.S. federal investigators have taken an interest in manufacturing at an AstraZeneca plant in England.” AstraZeneca confirmed that it received a “subpoena duces tecum” from the U.S. Attorney’s Office in Boston. The feds were asking for “documents and records related to manufacturing, quality or good manufacturing practices” at its plant in Macclesfield, the Washington Post reports.
The plant in Macclesfield is the company’s second largest manufacturing facility, with about 800 employees, Reuters said. It also packages drugs for 130 markets around the world. Reuters also pointed out that the plant has a unique production line for making Zoladex, a treatment for hormone-sensitive breast and prostate cancer.
The plant has been the manufacturing site for AZ’s psychotropic drug Seroquel, for which it paid $520 million in 2010 to settle off-label promotion allegations. However, it is unclear whether the subpoena is connected with Seroquel, which the U.S. Army is currently doing clinical trials on for its use in treating posttraumatic stress syndrome.
The company is cooperating, “but CFO Simon Lowth refused to give any specifics during an earnings call with reporters,” according to Reuters.
Ranbaxy cGMP Settlement
In the second case, DOJ announced in mid-May that Indian generic pharmaceutical manufacturer Ranbaxy had pleaded guilty to three felony charges, including lying to the FDA, which will result in the company paying US authorities $500 million in penalties. The criminal case is U.S. v. Ranbaxy USA, Inc., JFM-13-CR-0238 (D. Md.).
“This is the largest false claims case ever prosecuted in the District of Maryland, and the nation’s largest financial penalty paid by a generic pharmaceutical company for Food, Drug & Cosmetic Act (FDCA) violations,” said U.S. Attorney for the District of Maryland Rod J. Rosenstein. “The joint criminal and civil settlement, which reflects many years of work by FDA agents and federal prosecutors, holds Ranbaxy accountable for a pattern of violations and should improve the reliability of generic drugs manufactured in India by Ranbaxy.”
Last year, FDA and Ranbaxy agreed to an injunction that prevents drugs produced at the Paonta Sahib and Dewas facilities from entering the U.S. market until the facilities have been brought into full compliance with the FDCA and its implementing regulations. Since September 16, 2008, when the FDA placed drugs from those facilities on an Import Alert, Ranbaxy has not imported drugs from those facilities into the U.S.
In addition, the injunction requires Ranbaxy to review and verify data contained in Ranbaxy’s past drug applications to the FDA. United States v. Ranbaxy Laboratories, Ltd., et al., Case No. JFM-12-250 (D. Md).
In the recent settlement, Ranbaxy pleaded guilty to three felony FDCA counts, and four felony counts of knowingly making material false statements to the FDA. The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas, India.
The FDCA prohibits the introduction or delivery for introduction into interstate commerce of any drug that is adulterated. Under the FDCA, “a drug is adulterated if the methods used in, or the facilities or controls used for, its manufacturing, processing, packing, or holding do not conform to, or are not operated or administered in conformity with, cGMP regulations.” This assures that a drug meets the requirements as to safety and has the identity and strength, and meets the quality and purity characteristics, which the drug purports or is represented to possess.
“The FDA expects that companies will comply with the cGMP requirements mandated by law so that consumers can be assured that their medical products are safe and pure,” said John Roth, director of the FDA’s Office of Criminal Investigations. “The investigation that led to this settlement uncovered evidence showing that certain lots of specific drugs produced at the Paonta Sahib facility were defective, in that their strength differed from, or their purity or quality fell below, that which they purported to possess. The FDA and its law enforcement partners will continue to aggressively pursue companies and their executives who erode public confidence in the quality and safety of medical products by distributing products that do not comply with the law.”
Ranbaxy USA admitted to introducing into interstate commerce certain batches of adulterated drugs that were produced at Paonta Sahib in 2005 and 2006, including Sotret, gabapentin, and ciprofloxacin. Sotret is Ranbaxy’s branded generic form of isotretinoin, a drug used to treat severe recalcitrant nodular acne; gabapentin is a drug used to treat epilepsy and nerve pain; ciprofloxacin is a broad-spectrum antibiotic.
In a Statement of Facts filed along with the Information, Ranbaxy USA acknowledged that FDA’s inspection of the Paonta Sahib facility in 2006 found incomplete testing records and an inadequate program to assess the stability characteristics of drugs. “Stability” refers to how the quality of a drug varies with time under the influence of a variety of factors, such as temperature, humidity, and light. Such testing is used to determine appropriate storage conditions and expiration dates for the drug, as well as to detect any impurities in the drug.
Ranbaxy also acknowledged that the FDA’s 2006 and 2008 inspections of the Dewas facility found the same issues with incomplete testing records and an inadequate stability program, as well as significant cGMP deviations in the manufacture of certain active pharmaceutical ingredients and finished products. Ranbaxy USA also acknowledged that in 2003 and 2005 the company was informed of cGMP violations by consultants it hired to conduct audits at the Paonta Sahib and Dewas facilities. Those cGMP violations resulted in the introduction into interstate commerce of some adulterated drugs.
Ranbaxy USA further admitted to failing to timely file required reports known to FDA as “field alerts” for batches of Sotret and gabapentin that had failed certain tests. With respect to Sotret, Ranbaxy USA was aware in January 2003 that a batch of Sotret failed an accelerated dissolution stability test but continued to distribute the batch into the United States for another 13 months. With respect to gabapentin, Ranbaxy USA was aware at various times between June and August 2007 that certain batches of gabapentin were testing out-of-specification, had unknown impurities, and would not maintain their expected shelf life. Nevertheless, Ranbaxy USA did not notify FDA and institute a voluntary recall until October 2007.
Ranbaxy USA also admitted to making false, fictitious, and fraudulent statements to the FDA in Annual Reports filed in 2006 and 2007 regarding the dates of stability tests conducted on certain batches of Cefaclor, Cefadroxil, Amoxicillin, and Amoxicillin and Clavulanate Potassium, which were manufactured at the Dewas facility. Ranbaxy USA was found to have conducted stability testing of certain batches of these drugs weeks or months after the dates reported to FDA. In addition, instead of conducting some of the stability tests at prescribed intervals months apart, the tests were conducted on the same day or within a few days of each other. This practice resulted in unreliable test results regarding the shelf life of the drugs. Ranbaxy USA also acknowledged that drug samples waiting to be tested were stored for unknown periods of time in a refrigerator, which did not meet specified temperature and humidity ranges for an approved stability chamber, and that this was not disclosed to the FDA.
Civil False Claims Case
Under the civil settlement, Ranbaxy has agreed to pay an additional $350 million to resolve allegations that it caused false claims to be submitted to government health care programs between April 1, 2003, and September 16, 2010, for certain drugs manufactured at the Paonta Sahib and Dewas facilities. The United States contends that Ranbaxy manufactured, distributed, and sold drugs whose strength, purity, or quality differed from the drug’s specifications or that were not manufactured according to the FDA-approved formulation. The United States further contends that, as a result, Ranbaxy knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and the U.S. Agency for International Development (USAID), which administers the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).
The federal government’s share of the civil settlement amount is approximately $231.8 million, and the remaining $118.2 million will go to the states participating in the agreement.
The civil settlement resolves a lawsuit filed in U.S. District Court for the District of Maryland under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower, Dinesh Thakur, a former Ranbaxy executive, will receive approximately $48.6 million from the federal share of the settlement amount. The case is U.S. ex rel. Thakur v. Ranbaxy Laboratories Limited, Case No. JFM-07-962 (D. Md.).
The settlement permits HHS-OIG to still bring an exclusion action against any executives or persons responsible.