Wednesday, May 15, 2013

Fraud at Ranbaxy: David's Sleazy Behavior

I have not blooged much about the Indian generic drug company, Ranbaxy (one previous post:
--was really mostly about Pfizer and how they planned to protect their profits when Lipitor went generic). However, in the various reading I had done in the past as research about the drug industry, Ranbaxy was usually featured as a sort of David fighting the Goliath of the huge Western band-name drug makers. For example, Ranbaxy was praised when it dared to oppose the brand-name monopoly of expensive anti-AIDS drugs and produced generic versions that could be sold in Africa at affordable prices, presumably saving thousands of lives.

Unfortunately, according to recent investigative reporting for Fortune magazine by Katherine Eban:
--this particular David was guilty of some extremely sleazy behavior. (My Bible knowledge is a bit rusty but as best as I can recollect, the original David had some ethical problems too.)

Ranbaxy, which is now majority-owned by the Japanese drug firm Daiichi Sankyo, pleaded guilty on May 13 to 7 counts of selling adulterated drugs with intent to defraud, in response to charges brought by the U.S. government regarding drugs intended for American sale. The company agreed to pay $500M in fines, the largest penalty ever assessed against a generic company; but as will seem amazing in a minute, no execs were charged with any criminal wrongdoing.

What Eban's long piece reveals, based on now-released company documents and interviews with former employees turned whistleblowers, is that there was a pervasive and consistent culture of fraud at Ranbaxy through most of the decade of the 2000s at least. They gained regulatory approval for their generic drugs all around the world simply by making up the data.  In some cases they secretly substituted samples of the original brand-name drug for their generic and then showed (no surprise) that their drug was just as good as the brand-name. But much of the time they did not even bother to go to that much trouble and just made up numbers. This fraud was well known at the highest levels of the company and winked at.

Eban is particularly concerned for where the FDA was during all this. Her key whistleblower-informant, who in the end became the main figure in the federal fraud case, told the FDA in 2005 about the company's pattern of falsification of data. But for the remainder of the decade the FDA continued to approve new generic drug applications for Ranbaxy, including its biggest potential moneymaker, generic atorvastatin (Lipitor), even as its inspectors were looking into the company's Indian plants and unearthing massive problems and coverups. One FDA official who was communicating regularly with the whistleblower admitted at one point that the FDA was under a lot of pressure to approve these drugs and not to be too hard on Ranbaxy. Where Eban's investigations fall a bit short is not explaining to us where this pressure came from.

Just who was after the FDA to get it to go easy on an Indian (later Japanese-owned) company, even if it had an American subsidiary? One way to give this picture a bit of a rosier glow is to note that nearly all the events that Eban recounts took place during the George W. Bush administration, when we know that the FDA was under orders from higher up the executive branch to view its role as being as friendly to industry as possible. If that's a possible interpretation, we have to ask how confident we can be that the FDA has actually changed enough since those years so as not to be repeating this same pattern nowadays.


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