The department said the felony case is the largest-ever involving a generic drug manufacturer for making false claims to regulators and substandard manufacturing practices, most of which stemmed from testing that did not meet regulatory standards.
The company, a subsidiary of Indian generic pharmaceutical firm Ranbaxy Laboratories Ltd., pleaded guilty to manufacturing and distributing adulterated drugs from two plants in India.
Ranbaxy agreed to pay a criminal fine and forfeiture totaling $150 million and to settle civil claims under the False Claims Act and related state laws for $350 million.
Adulterated drugs do not necessarily imply that someone has knowingly tampered with a product. The regulatory definition of an adulterated drug is one that is not made according to current "Good Manufacturing Practices," the Justice Department said.
"When companies sell adulterated drugs, they undermine the integrity of the Food and Drug Administration's approval process and may cause patients to take drugs that are substandard, ineffective, or unsafe," said Stuart Delery, acting assistant attorney general for the Civil Division of the Department of Justice.
Ranbaxy USA admitted selling the acne medication Sotret, epilepsy and nerve pain drug gabapentin, and broad-spectrum antibiotic ciprofloxacin, despite inadequate testing of these products for stability, which defines a drug's effective shelf-life over time and under various environmental conditions, such as temperature changes, humidity and exposure to light.
The charges also include making false statements to regulators and knowingly delaying making reports of inadequate testing to authorities.
The notices are known as "field alerts."
"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," the Justice Department said.
Similarly, the company "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," the department said.
The company, however, failed to notify the FDA of the problems or recall the drug until October 2007.
In addition, the company admitted to making false statements to the FDA in annual reports of 2006 and 2007 "regarding the dates of stability tests conducted on certain batches of cefaclor, cefadroxil, amoxicillin, and clavulanate potassium," the department said in a statement.
The case also involves a whistle-blower, Dinesh Thakur, a former Ranbaxy executive, who will be paid $48.6 million for providing information that resulted in the settlement.