Generic Drug-maker Settles Whistleblower Suit for $500 Million

By Rheingold Giuffra Ruffo & Plotkin LLP

By Scott Kagan, ESQ

In another pleasing settlement for plaintiffs, the largest Indian drug manufacturer, Ranbaxy Laboratories Limited, has settled with the United States, and States’ Attorneys General in the amount of $500 million. Amongst recent allegations of falsifying data, violating Current Good Manufacturing and Laboratory Practices and selling substandard and unapproved drugs, Ranbaxy settled for their greedy acts.

The large settlement was due in great part to a whistleblower suit brought by Dinesh S. Thakur by way of the False Claims Act (FCA). Thakur, a former Ranbaxy director and global head of research information and portfolio management, learned of the fraud and reported it to the company. After falling on deaf ears, Thakur filed suit under the FCA. Allegations included that Ranbaxy caused false claims to be submitted for payment by government health care programs for various drugs that were “adultered and substandard.” Thakur will take a share of $48.6 million of that settlement money for his brave actions.

The FCA allows for whistleblowers to report fraud against the government by filing suit on behalf of the government entity. A successful suit is a win-win-win. The blower recovers 15-25% of the overall settlement, the government recovers hundreds of millions of dollars per year, and all while lightening the burden of the taxpayer.

In an interesting and ironic piece of the settlement, the State of Alabama will receive $6.8 million for the states ailing Medicaid Program after Ranbaxy submitted false claims to the State Medicaid agency. While fraud of this kind happens nationwide, it was Alabama’s State Supreme Court that recently held conduct of this nature was not fraudulent. Perhaps this settlement will change the Court’s opinion.

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