Qui tam lawsuit against drug company nets whistleblower $48.6 million

by Eric Pearson

A federal whistleblower received a $48.6 million payment after a pharmaceutical company agreed to a settlement in a lawsuit filed by the U.S. government. Ranbaxy Laboratories Ltd. agreed to pay $500 million to settle allegations that it lied to Food and Drug Administration investigators and sold drugs that were improperly manufactured.

The whistleblower lawsuit filed against Ranbaxy alleged that in 2003, the company sold an acne medication that it knew had failed quality control tests. An investigation by the FDA found that several other drugs manufactured by the company had failed quality control tests, including the antibiotics ciprofloxacin, cefaclor, and amoxicillin; an acne drug called Sotret; and a drug called Gabapentin, that is used to treat epilepsy and nerve pain.

A 2006 FDA investigation of Ranbaxy manufacturing plants in the Indian cities of Paonta Sahib and Dewas uncovered numerous quality control issues, including testing failures and problems with record keeping. Problems with manufacturing procedures at the two plants made it impossible for Ranbaxy to make sure that drugs manufactured there were of the required purity. Ranbaxy admitted in the settlement that it made fraudulent statements to FDA investigators about how drugs at the two plants were tested.

The whistleblower in the lawsuit against Ranbaxy, a former executive with the company named Dinesh Thakur, will receive $48.6 million from the $231.8 million share that will be paid from the settlement to the federal government. State governments involved in the lawsuit will receive an additional $118.2 million.

Thakur filed his whistleblower lawsuit—also known as a qui tam lawsuit—against Ranbaxy under a law known as the False Claims Act. Under the law, whistleblowers are entitled to receive a portion of funds recovered by the federal government from companies that commit fraud against the FDA, the Department of Defense, the IRS, the Treasury Department, or other federal agencies.