PROVIDENCE – Rhode Island announced Tuesday that it has banded with other states and the federal government in a $500 million settlement with generic pharmaceutical manufacturer Ranbaxy that will recover $290,600 for Rhode Island’s Medicaid program.
According to Attorney General Peter F. Kilmartin’s office, the settlement resolves civil and criminal allegations that Ranbaxy, based in Gurgaon, India, had introduced adulterated drugs into interstate commerce. As a result, false or fraudulent claims were submitted to Rhode Island’s Medicaid Program.
“With Medicaid being one of the greatest costs to states, it is imperative that each dollar is spent properly, and not diverted by providing substandard medications to unknowing providers and patients,” Kilmartin said.
The investigation resulted from an 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, which alleged that Ranbaxy knowingly manufactured, distributed and sold 26 generic pharmaceutical products that were manufactured in India between April 1, 2003, and Sept. 16, 2010.
According to a release, the strength, purity and/or quality of these products fell below FDA-required standards.
Through the settlement, Ranbaxy has agreed to pay the states and the federal government $350 million in civil damages and penalties to resolve civil allegations of poor manufacturing practices in its manufacturing facilities. More than half of the funds, or $266,729,715.10, will go to Medicaid programs funded jointly by the states and the federal government. The remaining amount is designated for other federal health care programs affected by Ranbaxy’s actions.
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.