On September 15, the U.S. Department of Justice announced that a qui tam, or whistleblower, lawsuit led to a $7.9 million settlement with Akorn Operating Company LLC, a pharmaceutical company. Akorn settled claims “that it caused the submission of false claims to Medicare Part D, in violation of the False Claims Act, for three generic drugs that were no longer eligible for Medicare coverage.” The whistleblower in the case will receive a $946,000 award for their role in the case.
The qui tam provisions of the False Claims Act enable private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery, if one occurs. In this case, the U.S. government intervened in the whistleblower’s case and conducted the investigation.
According to the press release, Medicare Part D reimburses “FDA-approved ‘prescription only’ (Rx-only) drugs” but not “over the counter” (OTC) drugs. OTC drugs “may be purchased by retail customers without a prescription and are not reimbursed by Medicare Part D.” The DOJ explains that a company can “seek to fully convert a brand-name Rx-only drug to an OTC drug” if the FDA approves the switch. After the FDA approves the change, “the drug is no longer considered an Rx-only product and makers of generic equivalents 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 sold three generic drugs during the time period referenced in the case: a nonsteroidal anti-inflammatory cream, an antihistamine eyedrop, and an antihistamine nasal spray. Since June 2021, the FDA “approved a full Rx-to-OTC conversion of the brand names for each of the three drugs. The U.S. “ alleged that Akorn submitted or caused to be submitted false claims to Medicare Part D, in violation of the False Claims Act, by continuing to sell the Akorn Generics under obsolete Rx-only labeling after the brand-name drugs were converted to OTC products.”
Akorn “admitted and accepted responsibility” for several facts as part of the settlement, one of which is that the company “delayed the Akorn Generics losing their Rx-only labeling because it believed that continuing to sell each as purportedly Rx-only would be more profitable for the company.”
The DOJ did not provide many details about the qui tam whistleblower in the case, only that the individual will receive $946,000.
Whistleblowers are critical to uncovering waste, fraud, and abuse in the medical and health care industry: fraudulent schemes can be particularly harmful to patients and erode trust in the medical system. In Fiscal Year 2021, qui tam whistleblowers helped the DOJ recover $1.6 billion in settlements. The DOJ highlighted health care fraud as “the leading source of the department’s False Claims Act settlements and judgments.”
Senator Chuck Grassley (R-IA), who has been consistently championed as the “patron saint” of whistleblowers, proposed amendments to the False Claims Act in 2021 that would strengthen protections for whistleblowers and clarify existing law. The amendment was widely supported by whistleblower organizations and advocates. However, WNN sources discovered that the pharmaceutical lobby intervened with the amendment’s passage. The National Whistleblower Center (NWC) is urging Congress to protect the False Claims Act: learn more here.
Read the DOJ press release here.