A settlement has been reached in a whistleblower class action lawsuit brought against Dava Pharmaceuticals Inc who is accused of misreporting drug prices in order to reduce its Medicaid Drug Rebate obligations.
The federal government’s portion of the settlement is approximately $5.7 million. Dava will also pay over $5 million to the Medicaid participating states and approximately $200,000 to certain public health services entities who paid inflated prices for the drugs at issue. The whistleblower will receive 15 percent of the settlement proceeds.
The initial whistleblower case was filed in 2010. The United States alleged that, between October 1, 2005 and Septtember 30, 2009, Dava and its corporate predecessors knowingly underpaid their rebate obligations under the Medicaid Prescription Drug Rebate Program. Under that program, participating drug companies are required to pay quarterly rebates to state Medicaid programs based, in part, on whether a drug is a “generic” or “branded” product and the difference between what the health care program paid for the drug and prices paid by other purchasers.
The government contends that in order to reduce its Medicaid rebate obligation, Dava incorrectly treated its version of the drugs cefdinir, clarithromycin and methotrexate as “generic” drugs rather than “branded” products, thereby lowering the overall percentage rebate payable to Medicaid. In addition, the government further alleges Dava reduced its Medicaid rebate obligations by incorrectly calculating average manufacturer prices for its versions of the drugs cefdinir, clarithromycin, methotrexate and rheumatrex. As a result, the government alleges that Dava underpaid drug rebates to the Medicaid program and overcharged certain public health service entities for these products.
