by Ben Vernia | September 20th, 2022
On September 15, the Department of Justice announced that the pharmaceutical company Akorn Operating Company, LLC, had agreed to pay $7.9 million to settle a whistleblower’s allegations that the company had continued to sell prescription drugs that had already been converted to over-the-counter status. According to DOJ’s press release:
Pharmaceutical company Akorn Operating Company LLC (Akorn) has agreed to pay $7.9 million to resolve allegations that it caused the submission of false claims to Medicare Part D, in violation of the False Claims Act, for three generic drugs that were no longer eligible for Medicare coverage.
FDA-approved “prescription only” (Rx-only) drugs may be dispensed only upon a prescription and are reimbursed by Medicare Part D, whereas “over the counter” (OTC) drugs may be purchased by retail customers without a prescription and are not reimbursed by Medicare Part D. Subject to FDA approval, companies may seek to fully convert a brand-name Rx-only drug to an OTC drug. After FDA’s approval of a drug’s full conversion to OTC status, the drug is no longer considered an Rx-only product and makers of generic equivalents are then required either to seek FDA approval for their own OTC switch or to seek withdrawal of their generic’s Rx-only approval and cease marketing it.
Akorn is a pharmaceutical manufacturer with a principal place of business in Illinois, which sold, among other products, the following generic drugs: (1) Diclofenac Sodium 1%, a generic nonsteroidal anti-inflammatory cream (Diclofenac), (2) Olopatadine Hydrocholoride 0.1% and 0.2%, a generic antihistamine eyedrop (Olopatadine), and (3) Azelastine Hydrochloride 0.15%, a generic antihistamine nasal spray (Azelastine) (collectively Akorn Generics) during the relevant time period. The FDA approved a full Rx-to-OTC conversion of the brand names of Diclofenac and Olopatadine in February 2020 and for Azelastine in June 2021.
The United States alleged that Akorn submitted or caused to be submitted false claims to Medicare Part D, in violation of the False Claims Act, by continuing to sell the Akorn Generics under obsolete Rx-only labeling after the brand-name drugs were converted to OTC products. As part of the settlement, Akorn admitted and accepted responsibility for the following facts:
Akorn delayed seeking the required OTC conversions for the Akorn Generics, even after learning that the brand-name drugs for each had converted to OTC status. In particular, Akorn delayed the Akorn Generics losing their Rx-only labeling because it believed that continuing to sell each as purportedly Rx-only would be more profitable for the company. Accordingly, Akorn continued to sell newly manufactured units of the Akorn Generics under their obsolete Rx-only labeling rather than beginning the process of converting these products to OTC or withdrawing their approval and ceasing their distribution. Akorn did not apply to FDA for an OTC conversion of Diclofenac until March 2021 or for Olopatadine until January 2021. Akorn eventually sought to withdraw its FDA approval for Azelastine, rather than convert it to OTC use, but did not do so until January 2022. FDA implemented this withdrawal in February 2022.
Akorn has been credited in this settlement under the Department of Justice’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases, Justice Manual §4-4.112.
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The government announced that the whistleblower will receive $946,000 of the settlement (a 12% relator’s share).
