February 15, 2012—Dava Pharmaceuticals has agreed to pay 340B covered entities $185,557 as part of a settlement with the federal government and a whistleblower over charges that it violated the federal False Claims Act by misreporting drug prices in order to reduce its Medicaid drug rebate and 340B drug discount obligations.
According to the Jan. 24 settlement, which the U.S. Justice Department (DOJ) announced on Feb. 8, Dava, which is based in New Jersey, agreed to “use its best efforts to identify affected [340B covered] entities and the amounts they were overcharged for purchases of Dava’s versions of the drugs cefdinir, clarithromycin, methotrexate, and/or rheumatrex.”[ms-protect-content id=”2799”] The settlement agreement refers to a separate, unpublished letter in which the parties agree to the process Dava will use to disburse these funds. It is not clear when Dava will mail the 340B refund checks or issue credits to providers’ wholesaler accounts.
Apexus, which operates the 340B Prime Vendor Program (PVP) under contract to the Health Resources and Services Administration (HRSA), said it has not been contacted by the government or the company about assisting in the refund distribution. Apexus has processed voluntary 340B refunds for overcharges on drug companies’ behalf on several occasions in the past.
According to DOJ, in order to reduce its Medicaid rebate obligation, Dava incorrectly treated its version of the drugs cefdinir, clarithromycin and methotrexate as generic rather than branded products, thereby lowering the overall percentage rebate payable to Medicaid. In addition, it said, Dava further reduced its rebate obligations by incorrectly calculating average manufacturer prices (AMPs) for its versions of the drugs cefdinir, clarithromycin, methotrexate and rheumatrex. “As a result, Dava underpaid drug rebates to the Medicaid program and overcharged certain Public Health Service entities for these products,” DOJ said.
The government said the pricing violations occurred between Oct. 1, 2005 and Sept. 30, 2009. Dava agreed to pay the federal government $5.7 million and state Medicaid agencies $5 million to settle the allegations.
The case is United States ex rel. Conrad v. Dava Pharmaceuticals Inc., Civil No. WDQ 10-408 (D. Md.).[/ms-protect-content]