Dava Pharmaceuticals settles accusations it overcharged Medicaid

Dava Pharmaceuticals Inc. will pay about $11 million to settle federal claims that it misreported drugs prices so it could charge more of the state-federal Medicaid program, according to U.S. Attorney for Maryland Rod J. Rosenstein and others in the U.S. Department of Justice and U.S. Department of Health and Human Services.

The settlement, under the False Claims Act, resolves allegations that Dava and corporate predecessors knowingly bucked the Medicaid rebate program between Oct. 1, 2005 and Sept. 30, 2009. That program requires drug companies to pay quarterly rebates to state Medicaid programs based on whether a drug is generic or a brand name and the difference in price for the health care program and the price paid by others.

Dava was accused of counting certain drugs as generic and offering enough rebates. Also, the company was accused of wrongly calculating the average manufacturer prices so it could overcharge some public health service entities.

The federal government will get about $5.7 million of the settlement money, $5 million will go to the state and $200,000 will go to some public health services entities that paid inflated drug prices. However, 15 percent of the money will go to a whistle blower.