US drops motion against Ranbaxy

Move comes after Indian drug-maker submitted required audit documents.

The US Department of Justice today withdrew a motion against Ranbaxy Laboratories after India's biggest drugmaker submitted a comprehensive set of audit documents to the authorities.

The department had filed the suit with the District Court of Maryland in July this year against Ranbaxy and its US consultant Parexel Consulting for allegedly concealing and forging crucial data.

After the move, Ranbaxy shares jumped 8.32 per cent on the Bombay Stock Exchange (BSE) today to close at Rs 277.30 in contrast to the benchmark Sensex's, which dropped 3.14 per cent.

"The US Department of Justice has now been provided with a comprehensive set of audit documents by Ranbaxy Laboratories, which will help resolve questions raised by the US government about the company's business practices and standards. Ranbaxy is confident that its pharmaceutical products are safe and effective and remains committed to cooperatively working with all regulatory and legislative authorities," the company said in a statement.

Analysts said the US Department of Justice's action was on the expected lines, since the company had earlier announced to cooperate with the investigations.

Sources said the outstanding documents demanded by the agency were on two specific draft standard operating procedures (SoPs), details on Toansa plant and active pharmaceutical ingredient (API) facilities of Panota Sahib, validation protocals and reports for two products and certain quality control procedures detailed by the consultant.

The investigation stems from an inspection by US Food and Drug Administration of Ranbaxy's facilities at Panota Sahib in June 2006, where it found discrepencies in manufacturing processes and maintenance of data. Ranbaxy and Parexel Consulting, who were appointed by the company to rectify the defects, are alleged to have withheld and forged crucial information from the regulator to get clearance for further manufacturing of drugs at the facility. Further, the regulator is also enquiring whether Ranbaxy used substandard APIs.

The scope of the US government's investigation include conspiracy, false statements and health care fraud relating to health care benefit programme of the US government and failure to maintain quality control systems and records at Ranbaxy's manufacturing facilities in India.

The US Department of Justice is also investigating whether Ranbaxy committed contract fraud and submitted false claims to Federal health benefit programmes, fabricated bio-equivalence and stability data (necessary to prove efficacy of a drug) to support marketing applications filed with the US drug regulator for selling generic drugs in the US and for the supply of generic HIV/AIDS drugs under the US President's Emergency Plan for AIDS Relief (PEPFAR).  

Following the motion, a US Congressional Committee had also announced an inquiry into Ranbaxy's drug approvals in the US and potential violations of manufacturing regulations and FDA's role in approving products of the Indian drug major.

Three weeks ago, the FDA had suspended Ranbaxy from selling 28 drugs, which are under the scanner in the US. The PEPFAR authorities are also reported to have suspended procurement of three HIV/AIDS drugs from Ranbaxy.