Bryan Cohen May 13, 2013, 6:50pm

NEW YORK (Legal Newsline) -- New York Attorney General Eric Schneiderman announced Monday a $500 million national settlement with an India-based generic pharmaceutical manufacturer for allegedly selling drugs that fell below regulatory standards.

Under the terms of a national settlement, Ranbaxy will pay $500 million, $44 million of which will go to New York's Medicaid programs, to resolve civil and criminal allegations that generic drugs manufactured by the company lacked necessary active ingredients due to poor quality control standards.

A 2007 whistleblower complaint filed in federal court in Maryland alleged Ranbaxy knowingly manufactured and sold generic pharmaceutical products in the U.S. that fell below standards required by the U.S. Food and Drug Administration.

"Pharmaceutical companies that manufacture and distribute worthless pills harm patients and abuse our Medicaid programs," Schneiderman said in a statement. "Under this national settlement, Ranbaxy's flagrant violation of America's drug standards will stop, they will pay civil and criminal penalties, and their U.S. subsidiary has pled guilty to numerous felony charges in federal court."

Between April 1, 2003 and Sept. 16, 2010, Ranbaxy allegedly failed to meet quality standards for 26 generic pharmaceuticals, including Amoxicillin, a common antibiotic, and Fenofibrate, a cholesterol reduction drug.

Ranbaxy will pay $350 million in civil damages and penalties to resolve the allegations, $266,729,715.10 of which will go to the state Medicaid programs and $83,270,284.86 will go to federal health care programs.

New York will recover $43,882,807.70 of the total settlement.

Ranbaxy USA, a Ranbaxy subsidiary, pleaded guilty to seven felony counts alleging violations of the U.S. Food, Drug and Cosmetic Act. Ranbaxy USA agreed to pay $150 million in criminal forfeitures and fines.

In January 2012, Ranbaxy entered into a consent decree with the federal government to address outstanding current good manufacturing practices and data integrity issues in two Indian manufacturing plants. The agreement requires a wide range of corrective actions to ensure violations do not occur in the future.

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