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The Dark Side of Generic Drugs

CEO Singh of RanbaxyDinesh Thakur was a whistleblower for the generic drug maker, Ranbaxy Laboratories in Gurgaon, India, 20 miles south of New Delhi. Due to his efforts, on May 13 of this year, Ranbaxy pleaded guilty to seven federal criminal counts of selling adulterated drugs with intent to defraud, failing to report that its drugs didn’t meet FDA specifications and intentionally making false statements to the government. Ranbaxy was ordered to pay $500 million in fines, forfeitures and penalties, which is the largest amount ever levied against a generic drug company. However, no Ranbaxy executives were charged with crimes. Thakur’s testimony as a whistleblower was also unsealed. Under federal whistleblower law, he will receive more than $48 million for his part in the exposure of the drug company’s wrongdoings.

Today Ranbaxy is the sixth largest generic drug manufacturer in this country, with more than $1 billion in US sales in 2012 and $2.3 billion worldwide. The company sells its products in more than 150 countries and has 14,600 employees.

The Ranbaxy case sheds light on the fact that generic drug manufacturers overseas can easily get away with breaking the rules. The FDA only relies on research data provided by the companies themselves, assuming that they will adhere to high ethical standards. Obviously, nothing could be farther from the truth.

Even more disturbing is that fact that in spite of Ranbaxy’s fraudulent actions, drug regulators allowed the company to keep selling many of its products. The FDA even granted Ranbaxy rights to sell new generic drugs, the most profitable of which being a generic version of Lipitor. Within the first six months of the introduction of the Lipitor knock-off drug atorvastatin, Ranbaxy made $600 million in sales. But it gets worse. In November 2012, Ranbaxy recalled millions of pills after tiny glass particles were found in some of them. But the recall was only temporary, as the FDA allowed the company to resume manufacture of the drug in March of this year.

The IMS Institute for Healthcare Informatics revealed that our drug supply last year was 84% generic. Today, over 80% of active pharmaceutical ingredients for all US drugs are manufactured overseas, as are 40% of finished pills and capsules. The global market for generic drugs is an astounding $242 billion and that figure is growing exponentially. With healthcare reform now including millions more people and our aging population, this trend is bound to continue due to the low prices of generics vs. brand names.

In 2009, the Government Accountability Office proved that only 11% of foreign drug manufacturing plants were inspected by regulators. Conversely, 40% of US domestic ones are inspected. Over the last few years, the FDA increased inspections of foreign plants with its goal being to match those of domestic ones. But even if this happens, it’s an apples and oranges comparison, as foreign inspections can last less than a week and allow companies advance notice. Domestic ones can last up to six weeks with no advance notice.

There is a lot more to the Ranbaxy story but it’s only more of the same. The point is that the American public is clearly NOT safe when it comes to generic drugs. And staying true to form, the FDA does little to nothing to correct the problem. So is Big Pharma continually allowed to commit horrendous crimes? Ask the agency that’s supposed to protect us from these crooks – the Food and Drug Administration. Clearly, they fall short in the most blatantly irresponsible ways.

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