On September 15, 2022, the Department of Justice (DOJ) announced a $7.9 million settlement with generic manufacturer Akorn Operating Company LLC (Akorn) to resolve allegations that Akorn caused the submission of over-the-counter (OTC) drugs to Medicare Part D in violation of the False Claims Act (FCA). Because Medicare Part D only covers prescription drugs, the pertinent drugs were not eligible for Medicare reimbursement. The conduct at issue under this settlement is a relatively novel basis for FCA liability, but we may see similar government enforcement actions in the future as the federal government actively encourages drug manufacturers to “switch” prescription drugs to OTC status in order to enhance their accessibility and reduce costs (see a prior post related to switching here). The settlement is also noteworthy because the DOJ specifically reported that it gave Akorn credit under its 2019 guidelines for taking disclosure, cooperation, and remediation into account in FCA cases.
Alleged Conduct at Issue
Akorn manufactures and distributes generic versions of various brand name products approved for marketing by FDA (with such products that are being copied by the generic company referred to as reference listed drugs, or RLDs). Three former prescription drugs were converted by the relevant RLD manufacturers to OTC marketing status in 2020 and 2021. This marketing status change meant that the labeling for the drug products no longer specified “Rx only” use and the...
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