Regeneron accused of inflating fees for eye drug
U.S. attorney in Boston says firm’s Medicare reimbursements boosted by an alleged incentive scheme
EAST GREENBUSH — Drugmaker Regeneron Pharmaceuticals, which employs more than 3,000 people in Rensselaer County, is being accused by the federal government of illegally inflating Medicare reimbursements it receives for its popular anti-blindness drug Eylea dating back to 2012.
In a civil lawsuit filed last month, the U.S. Attorney in Boston alleges that Regeneron set up a discount program for distributors selling Eylea to doctors that involved reimbursing credit card fees that were not disclosed in pricing data submitted to the U.S. Department of Health and Human Services, the agency that oversees Medicare.
“Since bringing Eylea to market in late 2011, Regeneron has paid hundreds of millions of dollars to subsidize Eylea purchases by reimbursing distributors for credit card processing fees — on the condition that the distributors use these payments to lower the effective price they charged for Eylea to doctors and retina practices using credit cards,” the lawsuit states.
The scheme violates the False Claims Act, the complaint alleges.
Eylea is a drug injected into the eye to slow vision loss in patients who are losing vision from diabetes and other conditions. Regeneron makes the drug in East Greenbush and sold more than $6 billion of the drug in the U.S. last year.
The company did not immediately respond to a request for comment, but it defended itself to the Albany Business Review in a statement that said the U.S. Justice Department has a “fundamental misunderstanding of drug price reporting standards.” The Business Review reported the complaint on Thursday.
Eylea is almost exclusively sold through dis
tributors who sell the drug directly to doctors, who must pay for it up-front, typically using credit cards.
Regeneron, which is based in Westchester County, would reimburse the distributors for the processing fees charged by the credit card companies, which on billions of dollars in annual sales is no small amount. “From 2012 to 2021, Regeneron’s credit card fee reimbursements for Eylea purchases exceeded $250 million to just one of its several distributors,” the lawsuit states.
The program allowed the distributors to lower prices for the doctors who used this method — and also provided the doctors with special incentives, none of which was included in Regeneron’s Medicare reporting, the lawsuit states.
“Regeneron paid those fees so that doctors and retina practices that purchased Eylea could use credit cards at no additional cost and obtain hundreds of millions of dollars in ‘cash back’ rewards and other credit card benefits on their Eylea purchases.”
The lawsuit goes on to allege that the subsidies paid to these distributors were in fact “price concessions” that Regeneron failed to report to HHS
“Regeneron knowingly excluded the credit card processing fee payments in its price reports, however, thereby falsely inflating Medicare reimbursements
for Eylea and giving Regeneron an unfair competitive advantage,” the lawsuit states. “Regeneron’s conduct, and theresulting harm to Medicare, is ongoing.”