Dava Pharmaceuticals, Inc., has agreed to an $11 million settlement in response to allegations of healthcare fraud. The allegations relate to a false misclassification of certain drugs: Cefdinir, Clarithromycin, and Methotrexate. The alleged misclassification of these drugs as “non-innovator” drugs as opposed to “innovator” meant that the company was able to claim a lower rebate under the Medicaid program, thus retaining more income for the company. According to the qui tam representatives Nolan & Auerbach, this practice by Dava Pharmaceuticals constituted Medicaid Fraud.
According to the False Claims Act, private citizens with knowledge of fraud may bring an action on behalf of federal and state governments. The government may recover three times the amount that it was defrauded, and successful whistleblowers can receive between 15 and 30 % of the recovery. In this case, the whistleblower is to receive 15% of the $5,731,098 federal share and additional percentages from the state share.
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