Nate Raymond and Dan Whitcomb
BOSTON (Reuters) – The U.S. Justice Department on Wednesday accused Regeneron (NASDAQ:) Pharmaceuticals of manipulating the Medicare drug pricing process by inflating the average selling price of its high-priced macular degeneration drug Eylea.
In a lawsuit filed in federal court in Boston, the department said the drugmaker for years failed to account for how it paid hundreds of millions of dollars to subsidize Eylea’s purchases by reimbursing drug distributors for credit card processing fees.
According to the lawsuit, these payments were made so that specialty drug distributors could accept credit cards from doctors and retina practitioners purchasing Eylea while continuing to charge the doctors a lower price.
The drug, which the Tarrytown, New York-based company began selling in 2011, is approved by the U.S. Food and Drug Administration to treat diseases including wet age-related macular degeneration, which impairs vision.
The wholesale cost of purchasing the drug is $1,850 per vial, and the department said it is a major cost for Medicare, the government health program for people 65 and older, which paid out more than $25 billion from 2012 to 2023.
The lawsuit says that by failing to disclose all price concessions for Eylea to Medicare, the drugmaker violated the False Claims Act, which prohibits submitting false claims to the government for payment.
“By doing so, Regeneron significantly inflated the cost of its drug to Medicare and increased its revenue for years,” Acting U.S. Attorney Joshua Levy of Massachusetts said in a statement.
Regeneron in a statement called the allegations unfounded and said the reimbursement of expenses incurred by specialty distributors was legal. He said he would “vigorously defend himself in court.”
This is the latest case brought by the U.S. Attorney’s Office in Massachusetts against Regeneron involving Eylea.
An ongoing lawsuit filed in 2020 accused the drug maker of using a charity that helps cover drug costs for Medicare patients as a means of paying kickbacks for the use of Eylea. The company denies wrongdoing.
Wednesday’s case began with a whistleblower lawsuit filed in 2020 by three people who worked at Regeneron. The lawsuit was filed under the False Claims Act, which allows whistleblowers to sue companies to recover taxpayer funds paid based on false statements.
The cases are initially sealed to give the Justice Department a chance to investigate and decide whether to intervene. Whistleblowers are entitled to a share of any financial recovery.