Goodsurance

Drug prices & Part D

Drug Maker Agrees to Pay 4 Million Dollars for Billing Medicare Part D for an Eye Drop That Had Gone Over the Counter

Somerset Lifesciences continued labeling a generic antihistamine eye drop as prescription-only for more than three years after its brand equivalent became available without a prescription, causing Medicare to pay pharmacy claims for a drug the program does not cover.

By the Goodsurance editorial teamOctober 19, 2026

The U.S. Department of Justice announced on October 16, 2026, that Somerset Lifesciences Inc., a New Jersey-based generic drug maker, agreed to pay 4 million dollars to resolve claims that it caused Medicare Part D to pay for a drug that was no longer eligible for federal coverage.

The drug in question is olopatadine, a generic antihistamine eye drop. In February 2020, the brand-name version of olopatadine moved from prescription-only to over-the-counter status. Under federal law, Somerset was required to update its own label to reflect that change. It did not. The company continued to sell the product as prescription-only through October 2023, the final month of the period covered by the settlement agreement.

A drug maker kept a common eye drop labeled as prescription-only after it became available over the counter. Medicare paid pharmacy claims for it for more than three years. The company agreed to pay 4 million dollars to settle.

Medicare Part D does not cover drugs that consumers can purchase at retail without a prescription. Because Somerset's version of olopatadine still carried a prescription-only label, Medicare continued to pay pharmacy claims for the drug for approximately three and a half years.

The government brought the case under common law unjust enrichment theories rather than the False Claims Act. The settlement requires Somerset to pay the 4 million dollars, plus any accrued interest, within ten business days of the agreement's effective date.

Beneficiaries who use olopatadine purchased over the counter pay for it out of pocket and cannot file a Part D claim. Those who had prescriptions filled during the disputed period were enrolled in plans that submitted claims to Medicare, which then reimbursed pharmacies at prescription rates.

The case reflects a recurring challenge for Medicare's prescription drug benefit: tracking when drugs shift to over-the-counter status and removing them from covered drug lists in a timely way.

In plain words

A company called Somerset Lifesciences agreed to pay 4 million dollars to Medicare. Medicare Part D covers prescription drugs. It does not pay for medicine that people can buy at a pharmacy over the counter without a prescription. In 2020, a common eye drop called olopatadine became available without a prescription. Somerset kept its version labeled as prescription-only. Because of that, Medicare kept paying for it by mistake for about three and a half years. The federal government said the company owed that money back. Somerset agreed to pay 4 million dollars to settle the claims.

Source: U.S. Department of Justice
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