Drug manufacturer agrees to $500 million penalty

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WASHINGTON — A subsidiary of India’s largest pharmaceutical company has agreed to pay $500 million in fines and civil penalties for selling adulterated drugs and lying about tests of the medications to federal regulators, the US Justice Department said Monday.

Prosecutors said the guilty plea by Ranbaxy USA Inc. represents the largest financial penalty by a generic drug company for violations of the Federal Food, Drug, and Cosmetic Act, which prohibits the sale of impure drugs.

As part of the settlement, Ranbaxy agreed to pay more than $2.65 million to the Massachusetts Medicaid program, according to state Attorney General Martha Coakley’s office.

The subsidiary of Ranbaxy Laboratories Limited admitted that it made and sold impure drugs at two manufacturing sites in India.

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