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Dava Pharmaceuticals to Settle Claims Based on Rebate Violations


MADISON — Attorney General J.B. Van Hollen announced today that Wisconsin has joined other states and the federal government and reached an agreement in principle with Dava Pharmaceuticals, Inc. (“Dava”), a Delaware corporation, to settle allegations that, between October 1, 2005 and September 30, 2009, the company 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 the drug is a “generic” or “branded” product.


Medicaid is the health care insurance program for the needy and disabled jointly funded by the state and federal governments. Dava will pay the state $51,391.05 as its share of $100,309.01 attributable to Wisconsin Medicaid. Dava will pay the states and the federal government a total of $11 million under the settlement.


“This settlement shows that all who participate in public assistance programs have to follow the rules,” Attorney General Van Hollen said. “Only by aggressive enforcement can we protect the taxpayer dollars that fund Wisconsin Medicaid so that those who truly need assistance can get it.”


Dava treated its version of the drugs cefdinir, clarithromycin and methotrexate as “generic” drugs, rather than “branded” drugs, thereby lowering the overall percentage rebate payable to Medicaid. In addition, Dava further reduced its Medicaid rebate obligations by incorrectly calculating average manufacturer prices for its versions of the drugs, thereby overcharging Medicaid and other federal healthcare programs for these drugs.


This settlement is based on a qui tam case that was filed in the United States District Court for the District of Maryland by a relator. A relator is a private party who files actions under state and/or federal false claims statutes.