Pharmaceutical Company Akorn Operating Company LLC Agrees to Pay $7.9 Million to Resolve Fraudulent Billing Allegations | USAO-MA

BOSTON — Akorn Operating Company LLC (Akorn), an Illinois-based pharmaceutical company, has agreed to pay $7.9 million to resolve allegations that Medicare paid false claims. Specifically, Akorn required Medicare Part D to pay for three Akorn generic drugs that were no longer eligible for Medicare coverage. As part of the settlement, Akorn admits to continuing to sell generic drugs under outdated prescription-only labeling.

FDA-approved “prescription only” (Rx only) drugs can only be dispensed by prescription. Medicare Part D reimburses Rx drugs only, but it does not reimburse “over-the-counter” (OTC) drugs, which can be purchased by retail customers without a prescription. Subject to FDA approval, pharmaceutical manufacturers may seek to converting a brand name Rx drug to an over-the-counter drug. After the FDA approves a drug’s full conversion to OTC status, the drug is no longer considered an Rx-only product and manufacturers of generic equivalents, such as Akorn, are then required to either request the FDA approval for their own OTC change, either to seek removal of Rx approval only from their generic and stop marketing it.

Akorn is a pharmaceutical manufacturer that 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 eye drop (Olopatadine); and (3), Azelastine Hydrochloride 0.15%, a generic antihistamine nasal spray (Azelastine) (collectively, Akorn Generics) during the relevant period. The FDA approved a full conversion from Rx to OTC of the brand names of Diclofenac and Olopatadine in February 2020 and Azelastine in June 2021.

As part of the settlement, Akorn admitted to delaying the search for conversions required for Akorn generics from Rx-only status to OTC status. Akorn continued to sell newly manufactured units of 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 distribution.

Akorn did not apply to the FDA for an over-the-counter conversion of diclofenac until March 2021 or for olopatadine until January 2021. Akorn ultimately sought to withdraw its FDA approval for azelastine, rather than the convert to over-the-counter use, but did not do so until January 2022. The FDA implemented this removal in February 2022.

In accordance with Department of Justice guidelines for considering disclosure, cooperation, and relief in False Claims Act cases, the Department of Justice credited Akorn’s cooperation in this case.

The allegations resolved by the settlement agreement were, in part, originally brought in a case filed under the whistleblower, or qui tam, provision of the False Claims Act. The case is captioned United States ex rel. Albermarle, LLC v Akorn Operating Company LLC. (D. Mass. 2021). The whistleblower will receive approximately $946,000 from the recovery.

US Attorney Rachael S. Rollins and FBI SAC Bonavolonta made the announcement. Assistant U.S. Attorney Abraham R. George, head of Rollins’ Affirmative Civil Enforcement Unit, and lead trial attorney Augustine Ripa of the Justice Department handled the case.