Regeneron Charged With Fraudulent Drug Pricing

The United States Justice Department has filed a complaint under the False Claims Act (FCA) against Regeneron Pharmaceuticals Inc., a company based in Tarrytown, NY. Regeneron manufactures and sells Eylea, an anti-vascular endothelial growth factor inhibitor approved by the Food and Drug Administration to treat, among other conditions, neovascular Age-Related Macular Degeneration, a prevalent, usually age-related condition that impairs vision.

Regeneron reported 2023 revenues of $13.12 billion, an 8% increase. Eylea is the biggest selling drug for the company with revenues of $5.89 billion for 2023.

The Justice Dept. complaint alleges that Regeneron fraudulently inflated Medicare reimbursement rates for Eylea by knowingly submitting false average sales price reports to the Centers for Medicare and Medicaid Services that excluded certain price concessions. In particular, the United States 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 the complaint, 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.

“We will not permit pharmaceutical companies to flout price reporting requirements to maintain high drug prices,” said Principal Deputy Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to protecting federal health care programs from improper actions by drug companies or others that drive up the cost of those programs at the taxpayers’ expense.”

“The government alleges that Regeneron manipulated Medicare’s drug pricing process, by knowingly failing to report its payment of credit card processing fees as price concessions to its customers,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “By doing so, 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.”

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.

Trial Attorneys Douglas Rosenthal, Asha Natarajan and Samuel R. Lehman of the Justice Department’s Civil Division and Assistant U.S. Attorneys Diane Seol and Lindsey Ross for the District of Massachusetts are handling the matter.