India-based drug maker Ranbaxy Laboratories has agreed to pay $39.75m to settle litigation about its participation in Texas Medicaid, a US health care programme for people with low incomes.

The company was investigated by the US state of Texas, for misrepresenting the drug price data, at the start of the year.

Ranbaxy said it will make the payments in tranches throughout August 2015.

According to Ranbaxy, the issue related to the manner the company historically reported pricing data to Texas Medicaid for its drugs.

In May, the company said it made a provision of $38.57m in its first quarter results for 'certain settlements done with the government authorities' in the US, reported Reuters.

In September, the company said US federal authorities gathered information on how it reported pricing data for certain products eligible for reimbursement under Medicaid.

The company, which will be acquired by Sun Pharmaceutical Industries, said it 'believes it fully complied with all the relevant laws'.

In 2013, the drug maker reached a settlement agreement with the US Department of Justice to pay $500m in civil and criminal fines over drug safety violations.