Earlier this summer, the United States Attorney’s Office for the District of Massachusetts filed a lawsuit against Regeneron Pharmaceuticals, Inc., alleging that Regeneron paid tens of thousands of dollars in kickbacks for Eylea. The kickbacks were allegedly paid by using a foundation as a conduit to cover co-pays for the macular degeneration drug.
According to the allegations in the complaint, starting in 2012 and shortly after the launch of Eylea, Regeneron considered how much to pay a foundation that covered Medicare co-pays for patients taking macular degeneration drugs. Around that time, Regeneron and Genentech were the leading manufacturers of macular degeneration drugs (Genentech’s product is Lucentis).
As outlined in the complaint, Regeneron allegedly funneled tens of millions of dollars in kickbacks through a third-party foundation to ensure that only a few Medicare patients had to pay a co-pay for their Eylea. Regeneron also ensured that physicians who prescribed and purchased the drug did not have to collect co-pays from their Medicare patients.
Regeneron’s senior management only wanted to pay the foundation enough to cover the co-pays for Eylea patients, referring to Lucentis problems as “Genentech’s problem.” Regeneron senior management also asked for assurances that its payments to the foundation would generate a solid ROI. To that end, Regeneron employees would follow instructions of senior management to frequently reach out to the foundation to learn the amount of money needed to cover the co-pays of Eylea patients only. Then, the employees would determine the amount of Medicare revenue Regeneron would collect from those patients. From 2013 and into 2014, Regeneron would pay the foundation exactly what was needed to cover Medicare co-pays for Eylea patients.
The government alleges that Regeneron’s conduct violated the anti-kickback statute which prohibits “indirect” kickbacks to subsidize the price of a Medicare drug, such as the payments Regeneron made to the foundation. The government further alleges that Regeneron’s senior management knew the conduct was illegal. In 2013, company auditors twice inquired about the information Regeneron was getting from the foundation about Eylea. Both times, Regeneron management, including the company’s commercial chief, lied and asserted that the company was not getting Eylea-specific data from the foundation when, in reality, as the executives knew, the company was getting frequent Eylea-specific reports from the foundation and then using that data to correlate the company’s payments to the foundation with the foundation’s spending on co-pays for Eylea. As a result, the government alleges, the physicians who prescribed and purchased Eylea rarely, if ever, had to consider the drug’s substantial cost, because they knew that the foundation would cover their patients’ Medicare co-pays.
Regeneron Response
Shortly after the lawsuit was announced, Regeneron released a statement stating that there was no merit to the complaint filed and maintained its innocence.
“It is unfortunate that the government chose to bring these baseless allegations related to our 2013 and early 2014 patient assistance donations at a time when Regeneron employees have been coming to work in the epicenter of the COVID-19 pandemic with the goal of providing an effective treatment. We look forward to having our case heard and will file a motion to dismiss,” said Joseph LaRosa, Executive Vice President, General Counsel and Secretary, Regeneron. “We believe our actions are legal and have helped preserve and restore the vision of elderly patients. Regeneron’s donations to independent charity foundations help elderly patients access medicines that are prescribed by their physicians.”