Regeneron Fraudulently Inflated Medicare Reimbursement On Drug: Feds

TARRYTOWN, NY — The federal government has accused Regeneron Pharmaceuticals Inc., which is based in Tarrytown, of fraudulently inflating Medicare reimbursement for one of its drugs.

The U.S. Department of Justice said Regeneron inflated Medicare reimbursement rates for Eylea, an anti-vascular drug approved by the Food and Drug Administration to treat, among other conditions, age-related macular degeneration, a usually age-related condition that impairs vision.

The DOJ said the pharmaceutical company knowingly submitted false average sales price reports to the Centers for Medicare and Medicaid Services that excluded certain price concessions — in particular credit card processing fees that Regeneron paid to specialty drug distributors to benefit its customers.

According to the complaint, the DOJ said 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.

Principal Deputy Attorney General Brian M. Boynton, head of the DOJ’s Civil Division, said he will not permit pharmaceutical companies to flout price reporting requirements to maintain high drug prices.

“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,” he said.

Daren Kwok, executive director of product and pipeline communications at Regeneron, said in response to an inquiry by Patch, that 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,” he said.

“The Government’s complaint demonstrates a fundamental misunderstanding of drug price reporting standards,” Kwok said. “Regeneron has fully cooperated with the Government’s investigation and will vigorously defend itself in court.”

The lawsuit was originally filed under the whistleblower provisions of the False Claims Act. Under the act, private parties file an action on behalf of the U.S. and receive a portion of the recovery. The act permits the U.S. to intervene in and take over the action, as it did in this case. If a defendant is found liable for violating the False Claims Act, the U.S. may recover three times the amount of its losses plus applicable penalties.