The premier global generic Indian pharmaceutical company, Ranbaxy Laboratories, may suffer major setback as the Department of Justice, on behalf of the US FDA has filed a consent decree of permanent injunction against Ranbaxy in the US District Court of Maryland.  The decree was filed on January 25, 2012, and is subject to court approval. With this news, Ranbaxy scrip declined by over 7 per cent to Rs. 447 on BSE.

The consent decree was filed against Ranbaxy and its subsidiary Ranbaxy Inc., headquartered in Princeton, New Jersey. Ranbaxy Labs’ Dale Adkisson, senior vice president, head of global quality and Arun Sawhney, chief executive officer and managing director, and Ranbaxy, Inc.’s Venkatachalam Krishnan, regional director Americas, were also named as defendants.

Dara Corrigan, FDA associate commissioner for regulatory affairs said, “Because this company continued to violate current good manufacturing practice regulations and falsify information on drug applications, the FDA took these actions in an effort to protect consumers. The FDA continues to be committed to protecting consumers from potentially unsafe products that may be offered on the market.”

The consent decree will address outstanding current good manufacturing practice (cGMP) and data integrity issues at Ranbaxy’s Paonta Sahib, Batamandi and Dewas, India facilities as well as cGMP issues at Ranbaxy Inc.'s wholly owned subsidiary Ohm Laboratories facility located in Gloversville, New York.

Ranbaxy’s Paonta Sahib, Batamandi, and Dewas, India facilities have been on FDA import alert since 2008 and Ranbaxy has closed its  Gloversville facility. The consent decree requires that Ranbaxy comply with detailed data integrity provisions before FDA will resume reviewing drug applications containing data or other information from the Paonta Sahib, Batamandi, and Dewas facilities.

Meanwhile, Ranbaxy has agreed to relinquish any 180-day marketing exclusivity that it might have for three pending generic drug applications, and the firm has further agreed to relinquish any 180-day marketing exclusivity that it may have for several additional generic drug applications if it fails to meet certain decree requirements by specified dates.

The consent decree contains liquidated damages provisions to cover many potential violations of the law and the decree. In addition to a provision requiring Ranbaxy to pay $15,000 in liquidated damages for each day defendants violate the law or the decree at the facilities covered by the decree and an additional sum of $15,000 for each overall violation of the law and the decree, the decree states that:  (1) if defendants distribute any drug from the facilities covered by the decree, Ranbaxy shall pay liquidated damages equal to two times the retail value of such drug, not to exceed 10 million dollars in any one calendar year; and (2) if defendants submit an untrue statement in connection with any application they file with FDA, Ranbaxy shall pay up to three million dollars in liquidated damages for each such statement, not to exceed 30 million dollars in any one calendar year.

The decree also permits FDA to order additional Ranbaxy facilities to be covered by the decree if the agency discovers through an inspection that the facility is not operating in compliance with the law and/or has serious data integrity issues.

The consent forced Ranbaxy to hire a third party expert to conduct a thorough internal review at the facilities and audit applications containing data from the affected facilities. Further, Ranbaxy should implement procedures and controls sufficient to ensure data integrity in the company’s drug applications; and withdraw any applications found to contain untrue statements of material fact and/or a pattern or practice of data irregularities that could affect approval of the application.

In addition, the consent decree prevents Ranbaxy from manufacturing drugs for introduction to the US market and for the President’s Emergency Plan for AIDS Relief (PEPFAR) Programme at the Paonta Sahib, Batamandi, Dewas, and Gloversville facilities until drugs can be manufactured at such facilities in compliance with US manufacturing quality standards.

Under this agreement, once Ranbaxy has achieved compliance with the data integrity requirements, a third party expert must conduct audits of the facilities to confirm that compliance is being maintained.  The company must authorize an individual to be responsible for all quality assurance and quality control activities to ensure that drugs have the required safety, identity, strength, quality, purity, and potency and are in compliance with the law and the decree.  In addition, they must establish an Office of Data Reliability to conduct pre-submission audits of all applications submitted from any facility after entry of the decree.