- The U.S. Department of Justice has sued Regeneron for violating federal anti-kickback laws, accusing the Tarrytown, New York-based biotech of illegally using a charity to cover Medicare patient co-pays for its flagship drug Eylea.
- In a complaint made public Wednesday, federal lawyers allege Regeneron funneled "tens of millions of dollars" into a charity called the Chronic Disease Fund to help subsidize Eylea co-pays. Regeneron said in a statement that the lawsuit has "no merit" and that it plans to defend its case.
- Co-pay charities have come under scrutiny in recent years as a way for pharmaceutical companies to potentially dodge federal rules prohibiting them from covering patient cost-sharing in Medicare. A number of drugmakers — among them Amgen, Alexion, Astellas, Pfizer and Johnson & Johnson — have paid hundreds of millions of dollars in settlements as a result.
Regeneron's run to becoming one of the biotech industry's most successful companies was catalyzed by the 2011 approval of Eylea, an injectable drug for a common form of age-related vision loss.
Eylea is Regeneron's top-seller, accounting for $4.6 billion of the nearly $8 billion in sales it earned in 2019. But spending on the drug is also one of the biggest costs for Medicare, the government-backed healthcare program for the elderly. Since Eylea came to market at a price of $1,850 per injection, Medicare Part B has spent more than $11.5 billion on the drug.
In 2013 and 2014, when Regeneron is alleged to have illegally worked with the Chronic Disease Fund, Medicare spent $1.9 billion on the drug, according to the lawsuit, filed in federal court in Boston.
The U.S. government claimed Regeneron achieved those sales in part by violating anti-kickback laws, giving the Chronic Disease Fund cash so "virtually non Medicare patient paid a co-pay, deductible, or co-insurance amount on Eylea."
Drug companies can help patients covered by commercial insurance pay for their co-pays, but it's illegal to do so for patients on Medicare — the payment is considered a "kickback." Pharma companies can, however, fund disease-specific charities that are meant to help patients afford their treatment. The catch is that the money can't be tied to any one medicine.
Drugmaker donations have increasingly come under government scrutiny, both because they can drive use of pricey therapies and because companies appear to be tying funding to their own products.
Since 2017, investigations have led to allegations, and eventually settlements, with drugmakers including Jazz Pharmaceuticals, Mallinckrodt, Amgen, Astellas, Lundbeck and Pfizer.
Regeneron was added to the list on Thursday. Government attorneys alleged the company put tens of millions of dollars into the Chronic Disease Fund, which was set up to help patients with age-related macular degeneration. Regeneron made payments after "confirming that the foundation needed the money to cover co-pays only for Eylea, and not for competing drugs," the lawyers stated.
Executives at Regeneron "took extensive measures to cover up the scheme," the government claims.
Regeneron denied any wrongdoing in a statement issued Monday afternoon, arguing that the "misguided lawsuit is attempting to assign wrongful intent to entirely legal conduct."
The company claimed that it made "lawful, charitable donations" to an independent patient-assistance group during those years and that the suit has no merit. Unlike others companies that were subpoenaed around the same time in 2017, Regeneron hasn't settled, because it "did not engage in illegal or wrongful conduct," the company said.
Regeneron's general counsel, Joseph LaRosa, expressed disappointment the U.S. government would bring charges forward when the company is working to develop a COVID-19 antibody treatment.
Regeneron shares fell 4% on the news.