Fortune: Katherine Eban’s stunning investigation of huge generic drug maker.


Katherine Eban

On Monday, the generic-drug-maker Ranbaxy pleaded guilty to federal drug safety violations and was ordered to pay a fine of $500 million to "resolve claims that it sold subpar drugs and made false statements to the Food and Drug Administration about its manufacturing practices at two factories in India," according to a story by Katie Thomas in The New York Times.

Thomas reported that Ranbaxy "acknowledged that it failed to conduct proper safety and quality tests of several drugs manufactured at the Indian plants, including generic versions of many common medicines, like gabapentin, which treats epilepsy and nerve pain, and the antibiotic ciprofloxacin."

That's disturbing, but it sounds like the kind of thing that can be corrected with proper oversight.

But I didn't call this meeting to review Thomas's story. I'm here to talk about a Fortune story of almost 10,000 words called "Dirty Medicine," a devastating investigation of Ranbaxy by Katherine Eban that has been years in the making. Here's what the failure "to conduct proper safety and quality tests of several drugs" sounds like in Eban's hands:

Executives approached the regulatory system as an obstacle to be gamed. They bragged about who had most artfully deceived regulators. Until 2005 the company didn't even have a functioning patient-safety department, and patient complaints piled up in boxes, ignored, uncategorized, and unreported to the FDA as required.

That creates quite a different impression, doesn't it?

Nothing I could say can capture the relentless wrongdoing that Eban chronicles in her article. Here are a few bullet points to encourage you to read it:

–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).

–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. [My reaction: Even the domestic tally is outrageous.]

— It is not a tale of cutting corners or lax manufacturing practices but one of outright fraud, in which the company knowingly sold substandard drugs around the world — including in the U.S. — while working to deceive regulators. The impact on patients will likely never be known. But it is clear that millions of people worldwide got medicine of dubious quality from Ranbaxy.

–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.

–The new FDA commissioner at the time, Dr. Andrew von Eschenbach, defended the agency, explaining that the FDA had not stopped the drugs because the samples it had tested met specifications. But that wasn't exactly true. The agency's own testing had shown that Sotret degraded far more rapidly than the company claimed.

–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. 

I've cheated Eban a bit, by plucking these out of the compelling narrative that she has woven around these excerpts. Eban says her narrative is based on 1,000 pages of documents and more than 50 interviews with employees, former employees, regulators, patients, and scientists.

If you're not familiar with Eban, it's probably because she huddles for years, sometimes, before unleashing one of these major investigative pieces. If you haven't had enough after reading her story, pick up her 2005 book, "Dangerous Doses: A True Story of Cops, Counterfeiters, and the Contamination of America's Drug Supply."

The problems with Ranbaxy stretch back at least to 2004, and only this week was the company fined. Eban helpfully provides a list of the generic drugs that Ranbaxy sells in the United States.

Read her story, clip the list, give a copy to your doctor, and by all means–avoid these drugs. That's not medical advice, which I'm not qualified to provide. That's common sense.

-Paul Raeburn