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Justice News

Department of Justice
U.S. Attorney’s Office
District of Massachusetts

Wednesday, September 14, 2022

Pharmaceutical Company Akorn Operating Company LLC Agrees to Pay $7.9 Million to Resolve Allegations of Fraudulent Billing

BOSTON – Akorn Operating Company LLC (Akorn), an Illinois-based pharmaceutical company, has agreed to pay $7.9 million to resolve allegations that it caused Medicare to pay false claims. Specifically, Akorn caused 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 that it continued to sell generic drugs under obsolete prescription-only labeling.

FDA-approved “prescription only” (Rx-only) drugs may be dispensed only pursuant to a prescription. Medicare Part D reimburses for Rx-only drugs, but it does not reimburse for “over the counter” (OTC) drugs, which may be purchased by retail customers without a prescription. Subject to FDA approval, pharmaceutical manufacturers 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, like Akorn, 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 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. 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. 

As part of the settlement, Akorn has admitted that it delayed seeking the required conversions for the Akorn Generics from Rx-only to OTC status. 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 the 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.

Under the Department of Justice’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases the Department of Justice credited Akorn’s cooperation in this matter.  

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 U.S. ex rel. Albermarle, LLC v. Akorn Operating Company LLC. (D. Mass. 2021). The whistleblower will receive approximately $946,000 from the recovery. 

United States Attorney Rachael S. Rollins and FBI SAC Bonavolonta made the announcement. Assistant U.S. Attorney Abraham R. George, Chief of Rollins’ Affirmative Civil Enforcement Unit, and Senior Trial Counsel Augustine Ripa of the Department of Justice handled the matter.

False Claims Act
Updated September 14, 2022