Ranbaxy to pay $40 m to Texas for settlement of Medicaid pricing litigation

Written by fe Bureau | Mumbai | Updated: Oct 17 2014, 06:45am hrs
Ranbaxy Laboratories said on Thursday it will pay $39.75 million to the state of Texas in the US to settle litigation related exclusively to the manner in which (it) has historically reported pricing data to Texas Medicaid for certain of its drugs.

The company said it will make the payment through a series of tranches through August 2015.

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, the company said in a statement to the exchanges.

Medicaid is a federally-sponsored programme that funds healthcare expenses of low-income individuals.

The company had said in a September 17 statement that it has received a Civil Investigative Demand from the US Department of Justice relating to the manner in which it reports pricing data for certain products eligible for reimbursement under the Medicaid program. The agency had asked for certain documents related to the subject.

During Q1FY15 results announced on July 29, Ranbaxy had provided Rs 237.8 crore as contingent expense. At the time, Arun Sawhney, managing director and chief executive, said the provision was towards the settlement of an ongoing case with the US government, but did not provide additional information.

Analysts have maintained a neutral view with respect to this payment, saying it was not significant enough to dent the company's bottomline.

In a separate press release, Ranbaxy also said it is terminating its GDR programme in the US. The company is currently in the process of being acquired by Sun Pharmaceutical Industries.