Drug manufacturer Akorn Operating Company agreed to pay $7.9 million in a settlement with the Department of Justice (DOJ) for continuing to sell three drugs through Medicare when they were no longer covered under the program.
Akorn, of Illinois, received approval from the Food and Drug Administration (FDA) to make three generic drugs—Diclofenac, Olopatadine, and Azelastine—available to patients through Medicare, the federal health program for seniors, according to the settlement agreement announced Wednesday. The DOJ’s case grew from a June 2021 whistleblower lawsuit filed by Albermarle LLC in U.S. District Court for the District of Massachusetts under the qui tam provisions of the False Claims Act.
Generics are less-expensive prescription equivalents to brand-name prescription drugs. Drug companies may convert their brand-name prescription drugs to over-the-counter (OTC) drugs by filing conversion applications with the FDA. Any prescription generic equivalents must also switch to OTC status when the brand-name drug converts.
OTC drugs are not covered under Medicare, so drug companies can no longer sell their drugs through Medicare once they lose prescription status.
In February 2020, the brand-name equivalents for Diclofenac and Olopatadine received approval from the FDA to become OTC drugs. Azelastine was approved for OTC status in June 2021.
Akorn did not immediately convert its three generics to OTC status, the DOJ said. Instead, Akorn continued to sell the drugs as prescription medications and billed Medicare for them, according to the agency.
Akorn didn’t apply to the FDA for an OTC conversion of Diclofenac until March 2021 and for Olopatadine until January 2021. It sought approval in January 2022 to withdraw Azelastine from the market.
Akorn admitted to the DOJ it deliberately delayed converting its three generics to OTC status and instead continued billing Medicare for them, “because it believed that continuing to sell each as purportedly Rx-only would be more profitable for the company,” according to the settlement.
Of the $7.9 million total, Akorn will pay approximately $5.1 million in restitution. Albermarle will receive about $947,000 from the total. The DOJ took into consideration Akorn cooperated with its investigation.
Akorn did not reply to a request for comment.