Red Pill: Indian Generic Drug Maker Ranbaxy Fined Five Hundred MILLION Dollars

By Steve Sailer

05/26/2013

Malvinder Singh, 2004

Ranbaxy got the U.S. legal monopoly on making the generic version of Lipitor, the world’s biggest drug. It also made a host of others, such as amoxicillin, the traditional antibiotic given to babies with earaches.

The article is slow to get going, but it just builds and builds.

By the way, I had been hearing the name "Ranbaxy" for a number of years, but I had absolutely no clue how corrupt it was. Consider Ranbaxy Laboratories Wikipedia page as of May 25, 2013, which is mostly cheerleading and doesn’t yet mention Eban’s 10-day-old article.

As you read it, consider Ranbaxy from the perspective of conspiracy theories. It would be not unreasonable to consider Ranbaxy a giant conspiracy to defraud the world’s patients. And yet … very few people, including company insiders, competitors, regulators, investors, patients, and journalists, seem to have noticed before Eban’s article pulled it all together to show us how deep the rabbit hole goes.

People like to imagine conspiracies as well-oiled organizational machines, but this one was comprised merely of incompetence, carelessness, greed, bad temper, and a whole lot of people assuming that things can’t be as bad as they look.

Dirty medicine

May 15, 2013: 9:03 AM ET

The epic inside story of long-term criminal fraud at Ranbaxy, the Indian drug company that makes generic Lipitor for millions of Americans.

By Katherine Eban

1. The assignment

FORTUNE — On the morning of Aug. 18, 2004, Dinesh Thakur hurried to a hastily arranged meeting with his boss at the gleaming offices of Ranbaxy Laboratories in Gurgaon, India, 20 miles south of New Delhi. …

[Thakur’s boss] Kumar said, "We are in big trouble," and motioned for Thakur to be quiet. Back in his office, Kumar handed him a letter from the World Health Organization. It summarized the results of an inspection that WHO had done at Vimta Laboratories, an Indian company that Ranbaxy hired to administer clinical tests of its AIDS medicine. The inspection had focused on antiretroviral (ARV) drugs that Ranbaxy was selling to the South African government to save the lives of its AIDS-ravaged population. …

As Thakur read, his jaw dropped. The WHO had uncovered what seemed to the two men to be astonishing fraud. The Vimta tests appeared to be fabricated. Test results from separate patients, which normally would have differed from one another, were identical, as if xeroxed.

Thakur listened intently. Kumar had not even gotten to the really bad news. On the plane back to India, his traveling companion, another Ranbaxy executive, confided that the problem was not limited to Vimta or to those ARV drugs. "What do you mean?" asked Thakur, barely able to grasp what Kumar was saying.

The problem, said Kumar, went deeper. He directed Thakur to put aside his other responsibilities and go through the company’s portfolio — ultimately, every drug, every market, every production line — and uncover the truth about Ranbaxy’s testing practices and where the company’s liabilities lay.

Thakur left Kumar’s office stunned. He returned home that evening to find his 3-year-old son playing on the front lawn. The previous year in India, the boy had developed a serious ear infection. A pediatrician prescribed Ranbaxy’s version of amoxiclav, a powerful antibiotic. For three scary days, his son’s 102° fever persisted, despite the medicine. Finally, the pediatrician changed the prescription to the brand-name antibiotic made by GlaxoSmithKline (GSK). Within a day, his fever disappeared. Thakur hadn’t thought about it much before. Now he took the boy in his arms and resolved not to give his family any more Ranbaxy drugs until he knew the truth.

What Thakur unearthed over the next months would form some of the most devastating allegations ever made about the conduct of a drug company. His information would lead Ranbaxy into a multiyear regulatory battle with the FDA, and into the crosshairs of a Justice Department investigation that, almost nine years later, has finally come to a resolution.

On May 13, [2013] 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 specifications, and making intentionally false statements to the government. Ranbaxy agreed to pay $500 million in fines, forfeitures, and penalties — the most ever levied against a generic-drug company.

(No current or former Ranbaxy executives were charged with crimes.)

Thakur’s confidential whistleblower complaint, which he filed in 2007 and which describes how the company fabricated and falsified data to win FDA approvals, was also unsealed. Under federal whistleblower law, Thakur will receive more than $48 million as part of the resolution of the case.

… More than 80% of active pharmaceutical ingredients for all U.S. drugs now come from overseas, as do 40% of finished pills and capsules. … Today’s global market for generic drugs is $242 billion and growing. …

Ranbaxy was the first foreign generics manufacturer to sell drugs in the U.S. and rose rapidly to become, today, the sixth-largest generic-drug maker in the country, with more than $1 billion in U.S. sales last year (and $2.3 billion worldwide). The company, now majority owned by Japanese drugmaker Daiichi Sankyo, sells its products in more than 150 countries and has 14,600 employees.

As our dependence on generic drugs from overseas has grown, so have questions about their oversight and safety. A report by the Government Accountability Office found that in 2009, regulators inspected only 11% of foreign drug manufacturing plants, while they inspected 40% of domestic ones.

… Due to complex logistics, foreign inspections can last less than a week and allow companies weeks of advance notice, while domestic ones can last up to six weeks and are unannounced. …

[Ranbaxy] is not a tale of cutting corners or lax manufacturing practices but one of outright fraud …

It was very hard for anybody to take the red pill and wake up to the fact that this giant business, which sold to the Japanese for $4.6 billion in 2008, wasn’t really a respectably corporate giant with an occasional lapse, but a big criminal enterprise that sometimes managed to deliver pills that more or less worked.

The rough outlines of the fraud at Ranbaxy first emerged in a 2008 court filing by the Justice Department. But its extent and depth and the involvement of top company executives have not been previously revealed. Fortune has also uncovered evidence that the company’s misconduct continued well into 2009, even after the FDA restricted the company’s activities.

This account is based on more than 1,000 confidential Ranbaxy documents, including internal reports, memos, e-mails, hundreds of pages of FDA documents obtained through Freedom of Information Act requests, and court records. Fortune interviewed more than a dozen former and current employees, as well as 40 scientists, public health experts, patient advocates, congressional investigators, and regulators.

As the Ranbaxy story makes vividly clear, generic-drug makers intent on breaking the rules — especially those operating abroad — can easily do so. Drug applications work on the honor system: The FDA relies on data provided by the companies themselves. … The approval system "requires the ethical behavior of the applicant," he said. Otherwise, "the whole house of cards will fall down."

In 2008 the agency halted the importation of 30 different drugs from two of Ranbaxy’s manufacturing plants in India and invoked a rare Application Integrity Policy, stopping the review of new drug applications from the Paonta Sahib manufacturing site until Ranbaxy proved their truthfulness.

But, bear in mind that Ranbaxy still kept its prize — the legal right to be the only company in the world to manufacture a generic version of Lipitor, Pfizer’s anti-cholesterol drug that was the big revenue generator in the world. Ranbaxy had the right to introduce generic Lipitor in November 2009, but just beforehand, Pfizer and Ranbaxy announced a settlement of Pfizer’s patent infringement suit that gave Pfizer and extra two years to reap monopoly profits in the U.S.

Being a cynical bastard, I assumed that the wily American company Pfizer had bribed the upstart Indian firm to hold off for two years. The practice of patent holders slipping money to generic rights holders to hold off introducing a rival is known as "pay for delay" and is the subject of an upcoming Supreme Court case.

I now suspect I got the true story 180 degrees backward. I was just not cynical enough about globalization.

Pfizer goes unmentioned in Fortune’s article. What their role was in all this is most intriguing.

Pfizer is a firm with a current market capitalization of over $200 billion dollars. Lipitor generated $115 billion in revenue for Pfizer over its last decade of exclusivity. In the years 2010 and 2011, when Ranbaxy was conceding to Pfizer two more years of lucrative American monopoly on the drug, Pfizer’s American revenue on Lipitor totaled about $10 billion over two years, in comparison to about $1 billion in 2012 when Ranbaxy finally entered. (What was Pfizer’s gross margin on Lipitor?)

How much did Pfizer know about how dirty Ranbaxy was when it settled its lawsuit againt Ranbaxy in late 2009? A lot, no doubt, since the scandals had been vaguely public for several years. And Pfizer would have a lot of incentive to learn even more about Ranbaxy. Did such knowledge play any role in Ranbaxy conceding two more years of American monopoly to Pfizer?

Seems like a pretty interesting topic from a game theory standpoint. Oh, and also because $10,000,000,000 was at stake. Perhaps somebody will someday take an interest in this subject.

… For all the actions taken by federal authorities, there is a deeply troubling aspect to the government’s role in the saga of Ranbaxy. Even as ever more details of the company’s long-running misconduct emerged, drug regulators permitted Ranbaxy to keep on selling many of its products.

Indeed, the FDA — charged with protecting the safety and health of Americans — went even further. Despite the agency’s finding of fraud and misconduct, it granted Ranbaxy lucrative rights to sell new generic drugs. In the most high-profile example, in November 2011 the FDA allowed the company to maintain its exclusive first dibs on making the generic version of a medicine taken by tens of millions of Americans: Lipitor. In the first six months, this privilege allowed Ranbaxy to generate $600 million in sales of generic atorvastatin, as nonbranded Lipitor is known.

Should the FDA have been surprised, then, when problems emerged just a year later? In November 2012, Ranbaxy had to recall millions of pills after tiny glass particles were discovered in some of them. Even that, it turns out, was enough for only a temporary suspension, and the FDA permitted the company to resume sales in March.

"The real story is how poorly our government has responded to all of this," says Vincent Fabiano, Ranbaxy’s former vice president of global licensing. He’s one of a number of former company executives who spoke to FDA or other investigators about the company and then watched in increasing disgust as, for years, nothing seemed to happen. "Still as we sit here today," Fabiano says, "Ranbaxy is in business in the United States."

The company that Dinesh Thakur arrived at in June 2003 was bristling with ambition but had a seat-of-the-pants feel. Fistfights erupted at executive meetings. The vice president of clinical research chain-smoked four packs a day.

… Lying to regulators and backdating and forgery were commonplace, he says. The company even forged its own standard operating procedures, which FDA inspectors rely on to assess whether a company is following its own policies. Thakur’s team was told of one instance in which company officials forged and backdated a standard operating procedure related to how patient data are stored, then aged the document in a "steam room" overnight to fool regulators.

Company scientists told Thakur’s staff that they were directed to substitute cheaper, lower-quality ingredients in place of better ingredients, to manipulate test parameters to accommodate higher impurities, and even to substitute brand-name drugs in lieu of their own generics in bioequivalence tests to produce better results.

… The company not only invented data but also fraudulently mixed and matched data, taking the best results from manufacturing in one market and presenting it to regulators elsewhere as data unique to the drugs in their markets.

Sometimes all the data were made up. …

Just three decades ago, generic drug companies in the U.S. were derided as patent breakers. They had no clear way to gain FDA approval, while brand-name-drug companies had a lock on the market. The 1984 Hatch-Waxman Act changed that. It created a pathway, the Abbreviated New Drug Application (ANDA), which allowed a generic drug company to simultaneously challenge a patent and demonstrate to the FDA that it could make a drug.

In the late 1980s several generic-drug companies were caught fabricating data and bribing FDA officials to gain approval. In the scandal’s wake, the FDA tightened regulations. It required that a company make three large "exhibit" batches to demonstrate that it could dramatically scale up its manufacturing, undergo inspection, and use an independent company to perform bioequivalence tests before an ANDA was approved. The purpose, says David Nelson, who exposed the 1980s scandal as a senior investigator for the House Energy and Commerce Committee, from which he retired in 2009, was to "prevent the systematic submission of false information" to get FDA approval.

The ANDA offered a lucrative reward for the company that risked almost certain litigation by first challenging a patent. If successful, the company got six months of exclusive sales after the patent lapsed, allowing the generics company to charge up to 80% of the brand-name price during that period. After that, other generics companies could jump in, and the price would drop to about 5% of the original price. Being first was the real jackpot. Consequently, first-to-file status became such an obsession that generic-drug company executives camped out in the FDA parking lot to file their paperwork first.

Ranbaxy learned how to game this system, according to former employees. To hasten the pace of its applications, Ranbaxy sometimes skipped a crucial intermediate step. Instead of making three medium-size exhibit batches and testing those for bioequivalence and stability, as required, Ranbaxy tested earlier and much smaller research-and-development batches that were easier to control and less costly to make. In some FDA applications, it represented these as much larger exhibit batches and presented the data as proof. And then there was the ultimate shortcut: using brand-name drugs as stand-ins for its own in bioequivalence studies.

These deceptions greatly accelerated the pace of the company’s FDA applications. They were also a grave public-health breach. Once Ranbaxy got FDA approval, it leaped straight into making commercial-size batches without any meaningful dry runs. The test results on file with the FDA were meaningless, and the drugs Ranbaxy was actually selling on the U.S. market were an unknown quantity, having never been comprehensively tested before.

In May 2004, three months before Thakur embarked on his research, Dr. Kathy Spreen joined Ranbaxy’s U.S. office as executive director of clinical medicine and pharmacovigilance. … At first, the company’s science seemed to exceed her expectations. … The data showing the concentration of Ranbaxy’s drug in the bloodstream appeared to match that of the brand name perfectly. "Look how good this company is," she remembers thinking. "The bioequivalence data is superimposable on the drugs we are modeling."

About a month later, while comparing the data for Sotret, the company’s version of the acne drug Isotretinoin [a.k.a., Accutane], Spreen found it similarly superimposable on the brand-name data. That’s when she began to worry. "If it’s too good to be true," she recalls thinking, "it’s probably made up."

… With her suspicions aroused, Spreen began asking her Indian counterparts to send underlying data that supported the test results. They repeatedly promised the information was on the way. When it didn’t arrive, she got excuses: It was a "mess"; they'd be "embarrassed." She recalls begging, "I don’t care if it’s written on the back of toilet paper. Just send me something." But it never arrived. …

… Spreen kept thinking that if only she could explain American regulations more clearly, Ranbaxy’s executives would understand. But no amount of explaining seemed to change how the company did business. When sales of a diabetes drug were sluggish, she says, one executive asked Spreen if she could use her medical license to prescribe the drug to everyone in the company so they could record hundreds of sales. Spreen refused.

… On a trip to India in mid-2004 Raj Kumar quietly confirmed to Spreen what she had already come to suspect: that crucial testing data for many of the company’s drugs did not actually exist and submissions to regulators had been forged. … Along with a number of Ranbaxy executives, Spreen was subpoenaed by congressional investigators to provide witness testimony. Reluctantly, she told them her story years ago — but nothing ever came of it.

CEO Tempest had assured Kumar that the company would do the right thing. So on an evening in late 2004, several months after assigning Thakur to dig up the truth, Kumar found himself before five members of the scientific committee of the board of directors, including Tempest and the chairman of the board.

Kumar had a PowerPoint presentation of 24 slides. It made clear that Ranbaxy had lied to regulators and falsified data in every country examined in the report. "More than 200 products in more than 40 countries" have "elements of data that were fabricated to support business needs," the PowerPoint reported. …

Thakur remained behind. But with Kumar’s departure, he had lost his protection. Three months after the board presentation, the company’s internal auditors arrived at his department for what they called a routine review. They stayed for 10 weeks, combing through his department’s books and interviewing staff. In late April the company accused him of browsing porn sites from his office computer … .

… Throughout the summer of 2005, Thakur tried to convince himself that the company’s medicine was no longer his problem. He was jobless and piecing together haphazard consulting work. He feared for his family’s safety. The company had a "reputation for threatening people, bullying people," he recalls. Thakur hired a security company, which posted a guard outside his home 24 hours a day.

… Thakur knew the [AIDS] drugs weren’t good. They had high impurities, degraded easily, and would be useless at best in hot, humid conditions.

They would be taken by the world’s poorest patients in sub-Saharan Africa, who had almost no medical infrastructure and no recourse for complaints. The injustice made him livid.

Ranbaxy executives didn’t care, says Kathy Spreen, and made little effort to conceal it. In a conference call with a dozen company executives, one brushed aside her fears about the quality of the AIDS medicine Ranbaxy was supplying for Africa. "Who cares?" he said, according to Spreen. "It’s just blacks dying."

On Aug. 15, [2005, i.e., almost 8 years ago] four months after resigning from the company, Thakur opened a Yahoo e-mail account and wrote under a pseudonym to top regulators in the U.S., Britain, the WHO, and Brazil. …

Finally he wrote directly to FDA commissioner Lester Crawford and alleged that Ranbaxy was selling "untested, spurious, ineffective medication." He added, I "plead with you to put a stop to this crime." …

To Thakur, the wrongdoing was black and white. He had given proof and expected action. But 10 days after the conference call, the FDA announced that it had approved Ranbaxy’s application for the first pediatric-AIDS drug for the U.S. market, Zidovudine.

… The agency needed an unvarnished look at the company. But as was standard for an overseas inspection, it notified Ranbaxy almost three months in advance that it was coming. …

Rivera-Martinez sounded almost plaintive when he wrote to Thakur that spring: "We are under a lot of pressure to approve Ranbaxy’s generic version of Pravastatin [a cholesterol-lowering drug] when the patent exclusivity runs out this Thursday."

It had been nine months since Thakur had first contacted the agency. He had watched as Ranbaxy got six new approvals. The FDA agent who had taken charge of his case tried to ease his frustration. "Imagine, if you will, that we were able to prove even half of what you have told us," she wrote to Thakur. "This would bring down the entire corporation. One of the largest in the world." …

On Feb. 14, 2007, Vincent Fabiano was at his desk at Ranbaxy’s U.S. headquarters in Princeton, N.J., when a man he had never seen before walked into his office. "Who the hell are you?" Fabiano asked. "I’m an FDA criminal investigator," the man said. Fabiano noticed the gun on the man’s hip and stepped away from his desk as directed.

The building was surrounded by police cars, and panic was spreading. "People were freaking out, crying," recalls a former employee. "They took every computer. There were people with guns." Employees called the search warrant the Great Valentines Day Raid. …

In January 2006, Malvinder Singh, the founder’s grandson, succeeded Brian Tempest as Ranbaxy’s managing director and CEO. At 33, with an MBA from Duke University, Singh was brash and competitive. The Indian business press dubbed him the Pharaoh of Pharma, and hailed him as an "out-of-the-box decision-maker."

Others viewed Singh as petulant and immature. "I want profit!" he would yell in meetings, two former employees recall. Among the staff, he was known for being preoccupied with his ranking on the Forbes list of India’s 40 richest people. When he and his brother Shivinder fell from No. 9 in 2004 to No. 19 in 2005, despite $1.6 billion in assets, Singh seemed to blame the decline on a lack of employee loyalty, a former employee recalls. …

On June 11, 2008, Singh stunned the Indian business world by announcing that he and his brother were selling their 34% stake in Ranbaxy to the Japanese drugmaker Daiichi Sankyo for $2 billion. Overall, Daiichi Sankyo shelled out $4.6 billion to take control of the company. Singh agreed to stay on for five years as CEO. Some in the Indian press portrayed the sale to a foreign company as a betrayal of national entrepreneurial pride. …

Everywhere the FDA had looked, its inspectors found fraud. … . "The culture of the company was corrupt to its core," says Nelson.

As congressional investigators turned up the heat, the agency finally cracked down. In September 2008, it announced it was restricting the import of 30 drug products made by Ranbaxy (11 of which had been approved after Thakur’s first contact with the FDA three years earlier). The agency still did nothing to recall the very same drugs on pharmacy shelves all over America, despite finding that Ranbaxy had committed fraud on a massive scale.

Nelson says that under FDA rules, the agency should have required Ranbaxy to recall every one of its drugs and resubmit every application. "Why [should] this company, of all companies, be exempted from normal FDA policies?" he asks. "There’s something here that just reeks." …

For years, many of Ranbaxy’s senior executives were expected to do what seemed like a small favor when they traveled to India: carry suitcases full of brand-name drugs that they were told were needed for research and development. At Ranbaxy’s U.S. headquarters, suitcases were kept packed with drugs and waiting for the next traveler to India. To some executives, this seemed like a minor shortcut, possibly to cut shipping costs, avoid quarantine, or speed delivery.

Generic-drug companies often study small amounts of a brand-name product in order to reverse-engineer it or to reference it as a point of comparison in applications. But proper channels for purchasing and transporting such drugs are well established and have become "ironclad" since the 2001 passage of the Patriot Act, according to an independent quality-assurance expert.

At Ranbaxy, top executives skirted these regulations and sometimes oversaw the secretive ferrying of drugs, at the very moment when the company faced deadlines to resubmit data to regulators. Fortune was unable to conclusively determine what the suitcase drugs were used for. Some former employees suspect that the company used the brand-name drugs as a substitute for its own in testing (as employees had seen in previous instances), in order to generate pristine data showing how closely Ranbaxy’s drug matched the brand it was seeking to replicate.

Whatever the purpose, what’s clear is that some Ranbaxy staffers strenuously resisted being used as drug mules. … Malvinder Singh, then the company’s worldwide head of pharmaceuticals, got involved. Through his secretary, he asked who would be taking charge of the samples and when they would reach Gurgaon.

In general, those who carried the drugs for Ranbaxy were given a letter claiming the products were for research and development and had no commercial value. This wasn’t true. In June 2004, one executive got stopped by Indian customs with hundred of packs (worth thousands of dollars) of an antinausea drug, Kytril, that he hadn’t declared. The drugs were seized, according to internal e-mails. In one, a Ranbaxy executive noted that this was "an illegal way of bringing the medicine in to India."

The illicit drug runs continued well after the company had pledged to the FDA that it would operate squarely within regulations. From 2007 to 2008 alone, 17 executives from the New Jersey office took undeclared drugs through Indian customs, four of them multiple times, according to a document given to the FDA.

In February 2009, a lawyer in the regulatory division at Ranbaxy’s New Jersey headquarters got wind of an even more suspicious incident. Some months before, Ranbaxy had agreed to retest its troubled Sotret formulation and submit new data to the FDA. … He learned that a Ranbaxy senior director had overseen the medicine’s unreported purchase from a pharmacist, who had dropped off the boxes at an employee’s house. Another employee had hand carried the drugs to London, where one of the company’s most senior regulatory executives — whose job involved making sure that the company followed all regulations — brought them to India in a suitcase.

When the lawyer reported the incident to the company’s top U.S. executives, they told him to drop the matter. Remaining deeply uneasy, in March 2009, he wrote a memo to file, which Fortune obtained, documenting the incident. The company had not only violated the iPledge program, he wrote, but also had "likely violated U.S. Export Laws, U.K. Import and Export Laws and possible Indian Import Laws."

Not long after Ranbaxy purchased the isotretinoin, the company submitted its new data to the FDA, which approved it. Within a year the company was forced to start recalling its Sotret again because the drug was degrading faster than it was supposed to — the very problem that had been occurring before.

In February 2009 the FDA punished Ranbaxy anew, labeling the company with the drug regulator’s version of a scarlet "A": The agency imposed a so-called Application Integrity Policy. That meant a dramatic shift in the regulatory dynamic. No longer would the FDA have the burden of proving fraud if it wanted to block a Ranbaxy product. The onus had flipped, and now the company would have to prove its products weren’t fraudulent in order to get them approved.

… Within three months, Malvinder Singh stepped down as CEO.

The government seemingly had a trump card in the negotiations — the final approval for Ranbaxy to sell generic Lipitor. Yet it seemed unable to bring a swift resolution to the process, as the company appeared to play for time. The FDA first sent a draft of the consent decree to Ranbaxy in August 2010, according to a document sent by an FDA lawyer. Six months later, Ranbaxy’s lawyers responded, asking for revisions. In a letter to Ranbaxy’s lawyers three months after that, an FDA attorney sent further revisions and tried to bring an end to the process, stating, "We believe this response reflects FDA’s final position and look forward to Ranbaxy’s prompt response which, in our view, should suggest only minor proposed revisions."

It would be eight more months, until January 2012, before the Justice Department announced the consent decree — and then another 17 months of wrangling between armies of lawyers before the case ended on May 13.

Well before the final resolution, in November 2011, the FDA gave its final blessing for Ranbaxy’s version of Lipitor. Asked about the decision to allow Ranbaxy to make Lipitor after its misconduct at two plants was revealed, an FDA spokesman asserts that the agency is required to evaluate a drug application on a "facility-specific basis." The company’s "data integrity problems," he says, occurred at facilities different from where its generic Lipitor is manufactured.

That’s true — but it leaves out the fact that Ranbaxy originally applied to make Lipitor at one of its Indian facilities, which was then blacklisted by the FDA. The agency permitted the company to make a significant shift in its application: to switch the plant at which it would make the generic Lipitor. Ranbaxy now proposed making the drug in the U.S. at a facility that was not under FDA investigation.

Last November, Ranbaxy was back in the headlines with some very unwelcome news — the company had detected tiny glass particles in its Lipitor. It had to recall millions of pills and temporarily halt production. Says the FDA spokesperson, "The fact that there were some quality problems that led to a limited recall of the generic product was not a result of the approval process or how it was handled."

Remarkably, Ranbaxy is in a stronger position now in the U.S. than it was before its entanglement with the FDA. … As one incredulous employee put it, "We don’t know why we're still in business."

The congressional inquiry into the FDA petered out over the years. But under the direction of David Nelson, investigators interviewed the FDA inspectors who went to Paonta Sahib and asked them a simple question: Would they feel comfortable taking Ranbaxy drugs? "Every single inspector that went to India said they would never take a Ranbaxy drug," says Nelson, "like eight out of eight."

They were not alone. One by one, each of the former Ranbaxy executives Fortune interviewed had determined, while still at the company, to stop taking Ranbaxy drugs.

In April 2010, Ranbaxy issued another in a mounting series of recalls, this time for a pediatric antibiotic of amoxicillin and clavulanate potassium.

In a statement, a Ranbaxy spokesman said that while the company’s own testing found the drug to be within specification, "the company has decided to recall all the lots in question as a matter of caution, given its commitment to the health and safety of patients." The oral suspension turned brown, instead of white, on being mixed. It was the same drug that Thakur had given his feverish young son, with no effect, seven years earlier.

Reporter associates: Doris Burke and Frederik Joelving

Go through your medicine cabinet and look for any pills with "RANBAXY" as the "Labeler." Take them back to your pharmacist and get real medicine.

Last year, while driving my wife and father on Mulholland on top of the Hollywood Hills, I was suddenly overcome with vertigo. Before I could plummet off Mulholland Drive, like the bad guy at the end of a 1971 episode of Mannix, I switched places with my wife and she drove me to the UCLA emergency room. After five hours of insanely expensive brain scans, a very nice doctor said they couldn’t see anything wrong with me.

I was still feeling wobbly a few days later when I remembered that a week before, I had picked up my regular prescription at Rite-Aid for a generic drug. Instead of being small, white, and oblong, the pills were suddenly large, red, and round. I had assumed that the drug process couldn’t go wrong, so I had accepted it.

When I remembered that I was taking a screwy looking drug (why is it now twice the volume of what I'd been taking since 1998?), I immediately stopped taking it and the vertigo permanently disappeared the next day. I went back to Rite-Aid and said this didn’t look like my regular drug. They said, yes, it is. I said, give me some of the small, white, oblong ones. A month ago they tried to give me some of the vertigo-inducing generics again. I complained and got the good ones.

We have no idea how much illness is caused by bad drugs. Nor is it a good thing to have to worry about. Paranoia about poisoning can be debilitating. In my experience, people of German backgrounds tend to be particularly prone to worry about poisoning.

Also, take a look through your stock portfolio.

This story raises troubling questions about globalization and the current cult of cheapness.

This also ought to be a wake-up call for India that it’s high-end culture has severe problems, but I doubt if the message will get through. Nor will I expect this story to do any damage to India’s image in America. The president and Tom Friedman keep telling us that the geniuses in China and India are going to eat our lunch, so what’s a vivid case story when it conflicts with The Narrative?

Another point is the growth of information overload. Having read this article, I would assume that "Ranbaxy" is now the world’s worst brand name. And yet, I don’t see much evidence for this. This article came out a week ago and two or three people mentioned it in the comments, but it’s barely made a splash. For all I know, any publicity is good publicity for the name "Ranbaxy."

I served on a jury in an even stupider fraud case in 2006 involving used car dealers cheating on sales taxes, and nobody else on the jury understood from the two weeks of testimony what had happened. I have the feeling that if you empaneled that same jury and read them this magazine article from start to finish in court, six of them wouldn’t remember the name of defendant ("Ran-bax-y") when they got into the jury room, and nine of them wouldn’t be persuaded of Ranbaxy’s guilt even when you point out that the article said Ranbaxy just pled guilty and paid a $500 million fine.

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