The serious fraud committed by Ranbaxy Laboratories, one of the country’s major pharmaceutical companies, has tarnished the image of the entire industry. The company has admitted charges of wrongdoing and adulteration in the US and has agreed to pay $ 500 in civil and criminal fine to the US department of justice in an out-of-court settlement.
It is one of the largest monetary settlements in the history of the pharmaceutical industry and still there is a view that the penalty should have been higher in view of the gravity of the offence. The company has been found to have resorted to bad manufacturing practices and adulteration of drugs, and it falsified data and test results to secure the approval of the US Food and Drug administration (FDA). One drug which it marketed in the US market was found to have been contaminated with glass powder.
What makes the case worse is that the malpractices were deliberate. The fraud came to light because of the efforts made by a whistleblower who was once a senior officer with the company. He had drawn the attention of the management to the malpractices but was told to cover up and destroy evidence. That shows that the wrongdoing was wilful. The fraud was exposed after he left the company and alerted the US authorities about the malpractices. The company was taken over in 2008 by a Japanese firm which is also planning to take legal action against the previous management. The fraud pre-dated the takeover. Fraud and deception in the case of drugs is much more serious than financial fraud.
The Ranbaxy fraud also exposes the lack of testing and checking in India of drugs produced in the country. There is neither a system nor adequate manpower for that and the regulatory practices are weak. It is believed that fake and substandard drugs are being sold widely. India’s pharmaceutical industry has done well recently and made a mark internationally for its range of products and their affordability. It has also become a major export industry. But its image has taken a bad knock with the Ranbaxy episode. The FDA has also banned import of drugs from a unit of another Indian drug company Wockhardt. Compromising on quality will only damage the industry’s credibility and future prospects.