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Tennessee Attorney General Bob Cooper

NASHVILLE - Generic drug maker Ranbaxy will pay Tennessee $5.53 million under a $500 million national agreement that resolves claims the company sold inferior drugs and made false statements regarding how the drugs were manufactured, State Attorney General Bob Cooper announced Thursday.

Tennessee joined with other states and the federal government in what the Justice Department called the largest settlement in history about questionable drug operations involving a generic manufacturer.

"We hope this agreement will help improve the safety of drug manufacturing practices throughout the industry," Cooper said in a news release.

The investigation rose from a whistle-blower's lawsuit in Maryland, filed under the federal False Claims Act. It alleged Ranbaxy knowingly made, distributed and sold generic drugs with strengths, purity or quality below standards made by the Federal Drug Administration.

At issue were 26 of the company's products, manufactured in India from 2003 to September 2010.

Ranbaxy USA, a subsidiary, has also pleaded guilty to seven felony counts alleging violations of the U.S. Food, Drug, and Cosmetic Act. The subsidiary has agreed to pay $150 million in criminal fines and forfeitures. That's part of the overall $500 million settlement.

Ranbaxy entered into a consent decree in January 2012 with the federal government to address outstanding data integrity and good manufacturing practice issues to ensure the violations do not occur again.

A team from the National Association of Medicaid Fraud Control Units conducted the settlement negotiations with Ranbaxy on behalf of the states.

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