More than a dozen generic drug manufacturers and "scores of individuals" are under criminal suspicion and may be indicted within two years in a fraud and bribery investigation of the industry, Rep. John D. Dingell (D-Mich.) said yesterday.

Dingell, chairman of the House Energy and Commerce subcommittee on oversight and investigations, said in a memorandum to panel members that probes show a "dismal picture" of an industry "contaminated by corruption, fraud, false statements and/or major manufacturing malpractice."

Spokesmen for the Generic Pharmaceutical Industry Association, representing the drug firms, could not be reached for a response.

The memo was released during a subcommittee hearing at which Maryland's top two federal prosecutors blamed Reagan-era deregulation for lax enforcement of Food and Drug Administration rules and a "cozy relationship" between FDA regulators and industry representatives seeking to speed FDA approval of new drugs ahead of their competitors.

"We simply cannot take the cops off the beat," said U.S. Attorney Breckinridge L. Willcox, accompanied by his first assistant, Gary P. Jordan.

Willcox's office has convicted three drug companies, seven executives and employees and one consultant on charges ranging from perjury and racketeering to making false statements and paying thousands of dollars in illegal gratuities to FDA chemists.

Five FDA employees, including a former chief of the generic drug division, also have been convicted of receiving illicit gratuities and other charges.

Dingell's memo listed 30 drug companies and laboratories cited by the FDA and the subcommittee for alleged misconduct ranging from minor record-keeping violations and unapproved manufacturing procedures to forged documents and substitution of brand-name drug products for generic companies' cheaper copycat versions in government-required tests for safety and effectiveness.

Subcommittee sources said investigations by the panel, FDA and Willcox's office have looked into activities of 39 generic drug companies, and only about a half dozen appear free of criminal or regulatory taint.

Another 15 companies are about to come under FDA scrutiny, bringing the total to 54, the bulk of the industry, the sources said.

"The generic drug industry is the most pervasively corrupt this subcommittee has ever uncovered," Dingell said yesterday.

With few exceptions, he said, manufacturers "opposes any meaningful reform. The American people deserve a much better deal than the choice between over-priced {brand-name} medicine and affordable but risky {generic} drugs."

While the industry has shown a "reckless disregard for the health and safety of the consuming public," Willcox said he has found no evidence that any improperly tested drugs have harmed anyone.

He said several major manufacturers "marketed widely selling drugs that were not shown to be therapeutically bioequivalent to the brand name by appropriate testing and hence were of questionable or unknown safety and efficacy."

For example, two former employees of Bolar Pharmaceutical Co., one of the nation's largest generic drug producers, recently pleaded guilty to helping cover up a scheme to fill batches of Bolar capsules with brand-name Dyazide, a hypertension drug, in government tests.

Investigators said the scheme and the coverup were directed by "senior Bolar officers" and that more charges are expected.