Somerset Lifesciences Inc. Agrees to Pay $4M to Resolve Allegations of Causing Medicare to Pay Claims for its Mislabeled Generic Drug
Friday, October 16, 2026 - Somerset Lifesciences Inc. (Somerset) has agreed to pay $4 million to resolve common law claims for causing Medicare Part D (Medicare) to pay for its prescription-only (Rx-only) generic drug Olopatadine when it was no longer eligible for Medicare coverage. Medicare does not cover drugs that can be purchased by retail customers over-the-counter (OTC) without a prescription. In 2020, the brand name version of Olopatadine switched from Rx-only to OTC, and Somerset was required to change Olopatadine’s label from Rx-only to OTC as well. Instead, Somerset continued to label and sell Olopatadine as Rx-only and caused Medicare to wrongfully pay claims for an OTC drug.
“Today’s resolution underscores the Department’s commitment to safeguarding federal healthcare programs,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When companies cause Medicare to pay for products that are not eligible for coverage, the Department will act decisively to remedy that misconduct.”
Olopatadine (olopatadine hydrochloride ophthalmic solution USP, 0.1%) is the generic drug version of the brand name eyedrop Pataday Twice Daily Relief (olopatadine hydrochloride) ophthalmic solution, 0.1% (Pataday). Before February 2020, Pataday and Olopatadine were covered by Medicare and only available with a prescription. In February 2020, the U.S. Food and Drug Administration approved the sale of Pataday OTC. Generally, a generic drug’s label must mirror the label for its brand name drug. When Pataday’s label switched from Rx-only to OTC, Somerset was required to change Olopatadine’s label to OTC as well. Somerset, however, did not and continued to label and sell Olopatadine as Rx-only. By continuing to label and sell Olopatadine as Rx-only, Somerset caused Medicare to pay for Olopatadine claims by mistake. This action unjustly enriched Somerset.
This year the Administration launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to enhance the administration’s war on fraud, waste, and abuse in federal programs. When unscrupulous actors exploit these programs for their own financial gain, they defraud the government, harm the people these programs are designed to aid and protect, and undermine American businesses that play by the rules. The Civil Division’s False Claims Act (FCA) enforcement plays a critical role in combatting such fraudulent schemes, recovering billions of dollars for the American taxpayers, and holding wrongdoers accountable. FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division’s FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.
The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the FCA. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
This matter is being handled by Fraud Section Trial Attorney Vince Vaccarella.
Except for the admissions contained in the settlement agreement, the claims resolved by the settlement are allegations only and there has been no determination of liability.
U.S. Department of Justice
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Source: Justice.gov
