On July 30, President Bush signed a five-year extension of PEPFAR, prompting the Wall Street Journal to note ($) that much of the $131 million in funding is spent (PDF) on generic drugs. This is a marked departure from PEPFAR’s early—and heavily criticized—practice of purchasing only expensive, patent-protected, name-brand drugs.

Last year, PEPFAR allocated $9 million of those funds to Ranbaxy, India’s largest pharmaceutical company, for its generic antiretroviral drugs (ARVs), which inhibit the growth of HIV/AIDS. In 2007 alone, more than 1.8 million packages of Ranbaxy-produced ARVs were delivered to the 15 most affected countries where PEPFAR concentrates its efforts.

Yet throughout 2006 and 2007, while Ranbaxy profited from PEPFAR funding and supplied millions of ARVs to AIDS patients, the FDA was investigating allegations that the company’s generic ARVs might be of substandard quality.

The FDA first uncovered quality problems at a Ranbaxy plant in India in February 2006; four months later, it sent a warning letter to the company citing irregular markings on its generic ARVs taken from distribution warehouses in Uganda and Nigeria.

Now the Justice Department alleges that Ranbaxy submitted bogus data to the FDA in order to conceal the fact that its drug-manufacturing process violated FDA standards. Amotion (PDF) filed on June 7 by the U.S. Attorney’s Office in Maryland alleges that the company has engaged in a “pattern of systemic fraudulent conduct.”

No formal charges have been brought against the company yet. Neither Ranbaxy’s lawyer nor its spokesman have returned e-mails or phone calls.

Despite these serious allegations, Ranbaxy remains on the FDA’s list of generic ARVs approved for PEPFAR, which the report refers to as the “most updated approvals.”

How those drugs maintained their approval status and continued to be purchased through PEPFAR is not exactly clear. Last month, Rep. John Dingell (D-MI), chairman of the House Committee on Energy and Commerce, opened an investigation in order to find out.

An FDA spokesman declined to comment on why this drug is still being sold in the U.S. But he did explain that the FDA is not involved in the purchase or distribution of the drugs through PEPFAR. “We only expedite the approval process,” he said. “Another agency pulls the trigger.”

According to a spokeswoman at the Office of the Global AIDS Coordinator (OGAC), that task falls to the U.S. Embassy in each target country. “They put together a ‘country operational plan’ at the beginning of each fiscal year that describes how they’re going to spend that year’s funding,” she said. When asked specifically about Ranbaxy drugs, she referred questions to the FDA.

But it isn’t clear whether the U.S. Embassies were told of the Ranbaxy investigation or any potential adulteration of its ARVs. A spokesman at the Office of Global Health Affairs, a division of the Department of Health and Human Services, thought the FDA might have sent out an alert. But the spokesman at the FDA had never heard of that alert, adding, “FDA’s only public comment at this time is to acknowledge that Ranbaxy is under investigation.”

PEPFAR’s management is widely dispersed –- it has seven primary implementing agencies –- which may explain some of the confusion over whether the embassies were notified. But even a spokesman for the program most directly involved with the embassies’ drug purchases, the USAID-administered Supply-Chain Management System, did not know if the embassies had been notified about the Ranbaxy investigation.

The U.S. Embassies in Kenya, Nigeria and Uganda—the countries that purchased the most Ranbaxy ARVs in 2007—did not respond to e-mails. (Courtesy: Propublica.org)