For Immediate Release
Media Contact: Bob Cooper
(208) 334-4112

Date: April 24, 2012

Idaho to Receive $85,000 from Medicaid Fraud Control Settlements

(Boise) – Idaho has joined in Medicaid Fraud Control settlements with two prescription drug manufacturers, Attorney General Lawrence Wasden said today. The state will receive $64,447.90 in a settlement with KV Pharmaceutical and $20,130.29 in an unrelated settlement with Dava Pharmaceuticals, Inc.

The settlement with KV Pharmaceutical resolves allegations that its subsidiary, Ethex Corporation, failed to advise the Centers for Medicare and Medicaid Services (CMS) that two unapproved products did not qualify for coverage under federal and state healthcare programs.  KV Pharmaceutical Company was the parent company of now-defunct Ethex Corporation.

Ethex is alleged to have submitted false quarterly reports to the government related to Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules.  While the active ingredients in the drugs had been in products on the market for many years, the Food and Drug Administration made determinations in the late 1990s that resulted in the drugs being ineligible for reimbursement by government healthcare programs such as Medicaid.

The settlement resolves allegations that Ethex misrepresented the regulatory status of both drugs and failed to advise CMS that these unapproved drugs did not qualify for coverage under federal health care programs.  Ultimately, neither drug ever received full regulatory approval for safety and effectiveness, and neither product is currently on the market.

Idaho Medicaid will receive $58,218.02 from the Kava settlement.  $6,229.88 in additional recoveries will be deposited in the general fund for appropriation by the legislature.

In a separate and unrelated matter, Idaho joined other states and the federal government in settling allegations that Dava Pharmaceuticals, Inc. underpaid its rebate obligations under the Medicaid Prescription Drug Rebate Program from 2005 to 2009. 
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.

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.

Idaho will receive $20,130.29 from the Dava settlement.  $17,688.07 will go to Idaho Medicaid and $2,442.22 in additional recoveries will go to the state general fund.

Teams from the National Association of Medicaid Fraud Control Units (“NAMFCU”) participated in the investigations and conducted the settlement negotiations with Dava on behalf of the settling states. 

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