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Idaho AG announces Medicaid fraud settlement

By Bryan Cohen | Apr 24, 2012


BOISE, Idaho (Legal Newsline) - Idaho Attorney General Lawrence Wasden announced on Tuesday that the state has joined Medicaid Fraud Control settlements with two manufacturers of prescription drugs and will receive $85,000 in total.

Idaho will receive $20,130.29 in a settlement with Dava Pharmaceuticals Inc. and $64,447.90 in a different settlement with KV Pharmaceutical.

The settlement with Dava resolves allegations that the company underpaid its rebate obligations as part of the Medicaid Prescription Drug Rebate Program between 2005 and 2009.

As part of the program, participating drug companies must pay quarterly rebates to state Medicaid programs based partially on whether the drug is a branded or generic product.

Dava allegedly treated its version of the drugs methotrexate, clarithromycin and cefdinir as generic instead of branded drugs, lowering the overall percentage rebate to be paid to Medicaid. Dava also allegedly reduced its Medicaid rebate obligations by calculating average manufacturer prices for its versions of the drugs incorrectly, leading to an overcharge for Medicaid and other federal healthcare programs.

Of the Dava settlement funds, $17,688.07 will go to Idaho Medicaid and $2,442.22 in other recoveries will go to the general fund for the state.

The settlement with KV resolves allegations that the company's subsidiary, Ethex Corporation, failed to advise the Centers for Medicare and Medicaid Services that two products that were unapproved did not qualify for state and federal healthcare programs.

KV was the parent company of the now-defunct Ethex Corporation. Ethex allegedly submitted false quarterly reports to the government connected to Hycoscyamine Sulfate Extended Release Capsules and Nitroglycerin Extended Release Capsules. The Food and Drug Administration determined in the late 1990s that the drugs were ineligible for reimbursement by programs like Medicaid.

The settlement with KV resolves allegations that Ethex misrepresented the regulatory status of the two drugs and failed to advise CMS that the non-approved drugs did not qualify for federal health care program coverage. Neither drug ultimately received full regulatory approval for effectiveness and safety nor are both products currently on the market.

Idaho Medicaid will receive $58,218.02 from the Kava settlement and $6,229.88 in other recoveries will be deposited in the state's general fund.

Teams from the National Association of Medicaid Fraud Control Units participated in the cases against the two companies and conducted settlement negotiations with Dava on the settling states' behalf.

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