Ranbaxy drags US FDA to court

In an unprecedented move, generic drug maker Ranbaxy has sued the US Food & Drug Administration (US FDA) for revoking the approvals to two of its key drugs — Valcyte (Roche) and Nexium (Astrazenca). The lawsuit, filed in District of Columbia in the US and reviewed by Business Standard, names US Health Secretary Sylvia Burwell.

Another Indian drug firm, Dr Reddy’s, which was granted an approval to launch a Valcyte generic (after the approval to Ranbaxy was revoked), has intervened in the case. It is on the side of the American drug regulator, as a legal wrangle on the matter could hurt its prospects. Ranbaxy and Dr Reddy’s did not immediately comment on the matter.

Earlier this month, the US FDA had revoked Ranbaxy’s six-month exclusivity for Nexium and Valcyte. The exclusivity period in the US market could have added about $200 million to Ranbaxy’s kitty.

“FDA has no power to correct an alleged mistake it made six years ago,” Ranbaxy said in the suit filed last week. On Nexium’s exclusivity, the US FDA had told this newspaper that FDA had rescinded a tentative approval under “rare circumstances”.

In the lawsuit, Ranbaxy said the US FDA’s move was arbitrary, capricious, contrary to law and in violation of constitutional rights. It also exceeded the agency’s statutory authority, the company added. “The agency issued its decision with no prior notice to Ranbaxy. It gave Ranbaxy no opportunity to comment on the issues raised. And, the agency had no power to issue its decision,” the lawsuit said.

The US FDA had barred Ranbaxy's manufacturing units in India to sell products in the US market, which led to substantial losses for the company, in the process of being acquired by Sun Pharma.

Nexium, one of Astrazenca's major drugs, went off patent in May this year; Roche's Valcyte went off patent in 2010.

Ranbaxy shares on Tuesday declined two per cent from their previous close on BSE to end at Rs 628.75 apiece. Angel Broking has said while the company's move is one of the first of this kind, the outcome would be vital for Ranbaxy, as the drugs concerned were expected to record good revenue and profitability for the company. Ranbaxy has been facing rough weather for some time. Recently, it agreed to settle litigation regarding its participation in Texas Medicaid, the US federal-state healthcare programme for those with low incomes. The settlement deal was worth about $40 million. In May last year, the company had paid a penalty of $500 million to the US Department of Justice, after pleading guilty to felony charges related to drug safety and misrepresenting data to gain approvals.


The issue: Revoking approvals to two of Ranbaxy’s key drugs — Valcyte (Roche) and Nexium (Astrazenca)

$200 million: Additional revenue Ranbaxy could have earned with six-month exclusivity for both drugs

The lawsuit: Names US health secretary Sylvia Burwell

Taking sides: Dr Reddy’s has intervened in the case and sided with the American drug regulator, which had permitted it to launch Valcyte generic after revoking Ranbaxy’s approval

The contention: Ranbaxy claims that US FDA has no power to correct an alleged mistake committed six years ago

Allegations: Ranbaxy has said in its suit that US FDA’s move is arbitrary, capricious, and otherwise contrary to law; it violates constitutional rights and exceeds its statutory authority


2006: US FDA issues warning letter to Ranbaxy’s Paonta Sahib facility

2007: A whistleblower lawsuit alleges Ranbaxy defrauded federal programmes

2008: US FDA imposes import alert on Paonta Sahib & Dewas factories, bans 30 drugs

May 2013: Criminal charges filed against Ranbaxy in the US; firm agrees to pay $500-mn fine

Sep 2013: US bans imports from Mohali factory

Jan 2014: US FDA bans imports from the Toansa API unit

Apr 2014: Administrative subpoena to Toansa factory

Oct 2014: Ranbaxy agrees to pay $40 mn in a case related to Texas Medicaid

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