Akorn Operating Company LLC (Akorn) has agreed to pay $7.9 million for allegedly violating the False Claims Act causing Medicare to pay for invalid prescription drugs according to a recent Department of Justice press release. The pharmaceutical manufacturer was cited for causing the submission of false claims to Medicare Part D by continuing to sell generic drugs under “prescription only” (Rx-only) labeling after the brand name drugs were converted to OTC products. Medicare Part D does not reimburse for OTC drugs.
Brand name Rx-only drugs can be converted to OTC with FDA approval. Manufacturers of generic equivalents must then either seek approval for converting their product to OTC or seek withdrawal of their generic’s Rx-only approval and stop distribution.
The generic drugs in question are diclofenac sodium 1% gel, olopatadine hydrocholoride 0.1% and 0.2% eye drops, and azelastine hydrochloride 0.15% nasal spray. Diclofenac and olopatadine converted from Rx-to-OTC in February 2020 and azelastine converted in June 2021.
Instead of pursing approval or withdrawal of their own generics, Akorn admittedly continued to manufacture and sell these products with Rx-only labeling to increase profit for the company, even after learning of the Rx-to-OTC switch of the brand name drugs. Eventually, Akorn applied for OTC conversion with the FDA for olopatadine in January 2021 and diclofenac in March 2021. For azelastine, they applied for withdrawal rather than conversion in January 2022. FDA approved this withdrawal in February 2022.
Whistleblowers in this case under qui tam provisions will receive approximately $946,000 of the recovery.