False Claims Act Complaint Filed Against Regeneron for Fraudulent Drug Pricing Reporting
The US Department of Justice (DOJ) has filed a complaint under the False Claims Act (FCA) against Regeneron alleging that the company fraudulently inflated Medicare reimbursement rates for Eylea (aflibercept) by knowingly submitting false average sales price reports to CMS that excluded certain price concessions. In particular, the DOJ alleges that Regeneron knowingly failed to report price concessions in the form of credit card processing fees that Regeneron paid to specialty drug distributors to benefit its customers, according to a DOJ news release.
According to the complaint, which was filed under whistleblower provisions of the FCA, Regeneron paid these credit card fees so that distributors would accept credit cards for Eylea purchases while still charging a lower, cash price for the drug, and so that Regeneron’s customers—typically retina and ophthalmic practices—could receive credit card benefits for their purchases, such as “cash back” and other credit card rewards. Since Regeneron first received FDA approval for Eylea in 2011, Regeneron has paid “hundreds of millions of dollars” in credit card fee repayments for Eylea, the DOJ alleges in its complaint.
By knowingly failing to report its payment of credit card processing fees as price concessions to its customers, the DOJ said Regeneron greatly inflated the costs of its drug to Medicare over many years and enhanced its revenues. "Falsely reported average sales prices cost the Medicare system hundreds of millions of dollars and we will make every effort to prevent such practices," said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts
In a statement to Eyewire+, Regeneron said the allegations are "without merit."
"The complaint, which follows a Civil Investigative Demand from the U.S. Department of Justice in June 2021, and which the company previously disclosed, relates to the company’s lawful reimbursement of costs incurred by our specialty distributors. The Government’s complaint demonstrates a fundamental misunderstanding of drug price reporting standards. Regeneron has fully cooperated with the Government’s investigation and will vigorously defend itself in court," Regeneron said in the statement.
The lawsuit was originally filed under the qui tam or whistleblower provisions of the FCA. Under the FCA, private parties file an action on behalf of the United States and receive a portion of the recovery. The FCA permits the United States to intervene in and take over the action, as it has done here. If a defendant is found liable for violating the FCA, the United States may recover three times the amount of its losses plus applicable penalties.
The Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts are handling the matter with assistance from the Department of Health and Human Services (HHS) Office of Inspector General and the FBI.
The case is captioned United States ex rel. Does 1-2 et. al. v. Regeneron Pharmaceuticals, Inc. et al., No. 20-cv-1401-PBS.