US DOJ files false claims complaint against Regeneron for alleged Medicare reimbursement fraud

The U.S. Department of Justice announced it filed a complaint under the False Claims Act against Regeneron Pharmaceuticals, Inc., a Tarrytown-based company, for Medicare reimbursement fraud.

The Justice Department said Regeneron fraudulently inflated Medicare reimbursement rates for Eylea, an FDA-approved eye injection used to treat against wet age-related macular degeneration, diabetic eye disease and other retinal diseases that impair vision.

Regeneron allegedly inflated reimbursement rates for the drug by knowingly submitting false average sales price reports to the Centers for Medicare and Medicaid Services and excluding certain price concessions.

The Justice Department alleges Regeneron knowingly specifically excluded credit card processing fees that the company allegedly paid to specialty drug distributors so that the distributors would accept credit cards for Eylea purchases while still charging a lower cash price for the drug.

This practice then allegedly allowed the company's customers, typically retina and eye doctors and customers, to receive credit card benefits for their purchases like cash back and other credit card rewards.

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“Regeneron (allegedly) greatly inflated the costs of its drug to Medicare over many years and enhanced its revenues," said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. "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 whistleblower provisions of the False Claims Act, which state that private parties can file an action on behalf of the United States and receive a portion of the recovery. In some instances, such as this case, the United States can intervene and take over the lawsuit.

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 other applicable penalties if a defendant is found liable.

"Regeneron believes that the allegations against us are without merit," Regeneron executive director of pipeline and product communications Daren Kwok said. "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.

"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," Kwok said.

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 case along with assistance from the Department of Health and Human Services Office of Inspector General and the FBI.

The DOJ said any tips and complaints from any source about potential fraud, waste, abuse and mismanagement regarding healthcare or healthcare products can be reported to HHS at 800-HHS-TIPS (800-447-8477).