Sept. 25 (Bloomberg) -- AIDS drugs made by Ranbaxy Laboratories Ltd. won't be purchased under an American program to supply medicines to developing countries after the U.S. cited the company for violations in two of its plants.

The President's Emergency Plan for AIDS Relief suspended funding for three Ranbaxy generic drugs until the Food and Drug Administration says deficiencies have been resolved in one of the plants in India where they're produced, a spokeswoman for the program said yesterday.

The program provided $8.9 million for Ranbaxy's AIDS drugs last fiscal year, according to the spokeswoman. The FDA said on Sept. 16 that more than 30 generic drugs made by Ranbaxy, India's largest drugmaker, would be blocked at U.S. borders because of manufacturing failures at the two Indian plants. Ranbaxy declined 27 percent in Mumbai trading after the FDA's action through today.

``Funds cannot be used to support new orders'' for the three Ranbaxy drugs -- zidovudine, lamivudine and nevirapine -- manufactured at one of the plants in India, according to an e- mail from the AIDS program's spokeswoman. She provided the information on the condition that her name not be used, citing policies of the State Department, which runs the initiative.

Charles M. Caprariello, a spokesman for Ranbaxy, said he didn't have firsthand knowledge of the government's decision and couldn't comment.

Ranbaxy is working with the U.S. government ``to resolve all of the issues and concerns that have been raised,'' Caprariello said in a telephone interview.

Shares of Ranbaxy, based in Gurgaon, India, fell 15.2 rupees, or 4.9 percent, to 296.1 rupees in Mumbai trading. The shares closed at 403.2 rupees before the FDA's announcement on Sept. 16.

No Evidence of Harm

There is no evidence that Ranbaxy's medicines are harmful, though the violations could lead to defective products, according to the FDA.

The U.S. is blocking the importation of more than 30 drugs from Ranbaxy's plants in Paonta Sahib and Dewas, the agency said. Drugs made in other Ranbaxy plants aren't being blocked. The Paonta Sahib plant makes the three drugs that are part of the AIDS program, according to Caprariello.

The FDA issued warning letters to Ranbaxy last week citing numerous violations in the two plants, including inadequate sterile processing operations and inaccurate record-keeping. Products will be blocked until Ranbaxy resolves deficiencies at the plants, according to the FDA.

Although the FDA's action applies only to the U.S. market, the government decided to suspend funding for the AIDS drugs supplied overseas. It is a ``principle'' of the president's AIDS initiative to ``meet standards equal to those established for patients in the United States,'' the program's spokeswoman said.

Aurobindo, Cipla

Indian drugmakers Aurobindo Pharma Ltd. of Hyderabad and Cipla Ltd. of Mumbai are among companies that have been cleared by the U.S. to supply the three AIDS drugs under the government program, according to the FDA's Web site. The program plans to provide $1.9 billion in support of antiretroviral treatment programs for AIDS during this fiscal year, according to the program spokeswoman.

The House Energy and Commerce Committee last week said it was investigating the safety and effectiveness of AIDS drugs supplied by Ranbaxy through the AIDS program. Democratic and Republican leaders of the panel sent a letter to Secretary of State Condoleezza Rice seeking copies of government communications about Ranbaxy and its drugs provided under the government program.

The FDA's ``import alert'' barring entry of Ranbaxy drugs isn't related to a U.S. criminal investigation examining whether the company fabricated data to get its medicines cleared for sale, according to the FDA.

Justice Department

On July 3, the Justice Department asked a U.S. District Court judge in Maryland to force Ranbaxy to turn over audits completed by a contractor, which the company later agreed to provide. According to the motion, the government is investigating allegations including conspiracy, false statements and health-care fraud.

The Justice Department said in the court motion in July that ``allegations from reliable sources and supporting documents indicate a pattern of systemic fraudulent conduct, including submissions by Ranbaxy to the FDA that contain false and fabricated information.'' Ranbaxy has denied the allegations, and no charges have been filed.

To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net.

Last Updated: September 25, 2008 09:50 EDT