DOJ Sues Regeneron for Allegedly Inflating Medicare Pricing for Eye Drug Eylea

DOJ_iStock, Bo Shen

Pictured: U.S. Department of Justice building in Washington, DC/iStock, Bo Shen

The U.S. Department of Justice announced Wednesday it has filed a False Claims Act complaint against Regeneron Pharmaceuticals, alleging that the company “fraudulently inflated Medicare reimbursement rates” for its eye therapy Eylea (aflibercept).

In its 49-page complaint, the Department of Justice (DOJ) claimed that Regeneron knowingly provided the Centers for Medicare and Medicaid Services with false average sales price reports, which omitted price concessions associated with credit card processing fees.

“Regeneron knew that paying the credit card processing fees enabled customers to purchase Eylea from distributors with a credit card at a lower amount than the distributors otherwise would have charged,” the DOJ wrote in its complaint, adding that by using credit cards, the pharma’s clients—which included retina and ophthalmic clinics—would also be entitled to other benefits, such as cash-back rewards.

These benefits translated to “hundreds of thousands, and in some cases millions, of dollars in ‘cash back’” from Eylea purchases, the DOJ alleged. In some cases, these Eylea cash-back rewards “went directly into doctors’ pockets,” according to the complaint, with some physicians even using their personal credit cards to purchase Eylea.

Regeneron “deliberately chose not to report” these credit card benefits as price concessions, which in turn inflated Medicare’s reimbursement rates for Eylea, according to the DOJ.

“Falsely reported average sales prices cost the Medicare system hundreds of millions of dollars and we will make every effort to prevent such practices,” Joshua Levy, acting U.S. Attorney for the District of Massachusetts, said in a statement.

If found guilty, Regeneron will be on the hook for up to three times the amount of its losses, plus other applicable penalties.

"Regeneron believes that the allegations against us 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," a company spokesperson told BioSpace in an emailed statement.

"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," the spokesperson said.

Eylea is a recombinant fusion protein that works by blocking both the vascular endothelial growth factor-A and the placental growth factor, both of which play a crucial role in the formation of new blood vessels.

The drug first won the FDA’s approval in 2011 for the treatment of neovascular age-related macular degeneration and has since picked up several other indications, including diabetic macular edema, diabetic retinopathy and macular edema after retinal vein occlusion.

Eylea has also become one of Regeneron’s top-performing assets. In 2023, the pharma reported total net U.S. sales of nearly $5.9 billion.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at tristan@tristanmanalac.com or tristan.manalac@biospace.com.

Update (April 12): Added a statement from Regeneron.

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