In mid-September 2022, the United States Department of Justice (DOJ) announced a $7.9 million settlement with Akorn Operating Company LLC, to resolve allegations that Akorn caused Medicare Part D to pay for three generic Akorn drugs that were no longer eligible for Medicare coverage. As part of the settlement, Akorn did admit that it continued to sell generic drugs under obsolete prescription-only labeling.
Medicare Part D reimburses for prescription only (Rx-only) drugs, but not for over the counter (OTC) drugs, which may be purchased without a prescription. Subject to FDA approval, pharmaceutical manufacturers can seek to fully convert a brand-name Rx-only drug to an OTC drug. Once the Food and Drug Administration (FDA) approves a drug’s full conversion to OTC status, the drug is no longer considered an RX-only product and makers of generic equivalents have to either seek FDA approval for their own OTC switch or seek withdrawal of their generic’s Rx-only approval and stop marketing it.
At issue in this settlement were three generic drugs sold by Akorn: Diclofenac Sodium 1%, Olopatadine Hydrochloride 0.1% and 0.2%, and Azelastine Hydrocholoride 0.15%. Each of these drugs were generic equivalents of other drug manufacturers’ brand name products and were initially approved as Rx-only. The FDA approved a full Rx to OTC conversion for Diclofenac and Olopatadine in February 2020 and for Azelastine in June 2021.
This meant that on the OTC switch dates (February 2020 for Diclofenac and Olopatadine and June 2021 for Azelastine), the drugs could no longer be marketed as an Rx-only drug and were no longer approved to state “Rx only” on its label or packaging.
However, Akorn did not apply to the FDA for an OTC conversion of Diclofenac until March 2021 and for Olopatadine in January 2021. Akorn sought to withdraw its FDA approval for Azelastine, rather than convert to OTC use, in January 2022.
As part of the settlement, Akorn agreed that it delayed seeking the required conversions for the generics from Rx-only to OTC status and instead continued to sell newly manufactured units of its generic drugs under the obsolete Rx-only labeling instead of beginning the process of either converting the products to OTC or withdrawing the approval and stopping all distribution.
Because Akorn cooperated in the matter, the DOJ took that into account in coming to the ultimate settlement. Also, the allegations were originally brought, in part, by a whistleblower under the qui tam provision of the False Claims Act, and as such, the whistleblower will receive $946,887 from the total settlement. Akorn is also supposed to pay Relator’s counsel $45,000 for expenses, attorneys’ fees and costs, and/or wrongful termination claims under subsection 3730(h).