Ranbaxy made to pay $40mn to settle pricing litigation in US

Indian generic drug maker Ranbaxy Laboratories has agreed to pay $39.75 million (around Rs244 crore) to the state of Texas in the US to settle the latest round of regulatory litigation in the United States.

Ranbaxy said the penalty, which is connected with the pricing of products in the Texas Medicaid Programme, will be paid in tranches through 2015, the company stated in a filing with the Bombay Stock Exchange (BSE).

''The company has settled the litigation concerning its participation in the Texas Medicaid Programme. Under the settlement agreement, Ranbaxy will make payments to the state of Texas totalling $39.75 million in a series of tranches through August 2015,'' Ranbaxy said in its filing.

Gurgaon-based Ranbaxy said the claims related the manner in which the company has historically reported pricing data to Texas Medicaid for certain of its drugs.

''Ranbaxy believes that it fully complied with all relevant laws. However, the company settled the matter to avoid any further distraction and uncertainty of continued litigation with the state of Texas,'' Ranbaxy added.

Ranbaxy, which will soon become a subsidiary of Sun Pharma, had made an exceptional provision of Rs237.75 crore ($38.57 million) on account of settlement provision with US government in Q1FY15.

Last month, the company said US federal authorities had sought details on how it reported pricing data for some products eligible for reimbursement under Medicaid.

Ranbaxy's Texas settlement comes after the company pleaded guilty last year to felony charges relating to drug safety.

In May last year, the company had agreed to pay $500 million in civil and criminal fines under a settlement agreed with the US department of justice.

Ranbaxy had paid around $4,20,000 to the US state of Idaho as part of the $500-million settlement that the drug firm had signed with US authorities.

Ranbaxy, which pleaded guilty to felony charges over violation of manufacturing norms at its plants in Dewas in Madhya Pradesh and Paonta Sahib in Himachal Pradesh, will also pay the states and the federal government $350 million in civil damages and penalties.

Further, the US Food and Drug Administration (USFDA) had clamped down on the company for manufacturing norms violations and banned import of drugs produced at Ranbaxy's four plants in India.

In a separate filing, Ranbaxy said it has notified the Bank of New York Mellon to terminate the Deposit Agreements dated 7 July 1994 and underlying Global Depository Receipts (GDR) programme.

''The bank has, on October 15, 2014 issued the notice of termination of GDR Programme to the GDR holders and accordingly the bank will complete the process of termination of GDR programme as per the terms of such notice of termination,'' it added.