DOJ sues Regeneron Pharmaceuticals over allegedly inflating Medicare reimbursements

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The Department of Justice has filed a False Claims Act complaint against Regeneron Pharmaceuticals, a New York-based pharmaceutical company, over allegedly inflating Medicare reimbursement rates for Eylea, an injection therapy approved for retinal diseases.

It was approved by the Food and Drug Administration to treat, among other conditions, neovascular age-related macular degeneration.

WHAT'S THE IMPACT?

The complaint alleges that Regeneron fraudulently inflated Medicare reimbursement rates for Eylea by knowingly submitting false average sales price reports to the Centers for Medicare and Medicaid Services that excluded certain price concessions.

In particular, the United States alleges that Regeneron knowingly failed to report price concessions in the form of credit card processing fees that it paid to specialty drug distributors to benefit its customers.

According to the complaint, 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.

"The government alleges that Regeneron manipulated Medicare's drug pricing process, by knowingly failing to report its payment of credit card processing fees as price concessions to its customers," said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. "By doing so, Regeneron greatly inflated the costs of its drug to Medicare over many years and enhanced its revenues. 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 the qui tam or whistleblower provisions of the FCA. Under the FCA, private parties file an action on behalf of the United States and receive a portion of the recovery.

THE LARGER TREND

Settlements and judgments under the False Claims Act exceeded $2.68 billion in the fiscal year ending Sept. 30, 2023, and, of that total, more than $1.8 billion related to matters that involved the healthcare industry – including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians, the DOJ said in February.

The government and whistleblowers were party to 543 settlements and judgments, the highest number of settlements and judgments in a single year. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $75 billion.

The amounts included in the $1.8 billion reflect recoveries arising only from federal losses, but in many of these cases the department was instrumental in recovering additional amounts for state Medicaid programs, the DOJ said.

The recoveries in fiscal year 2023 also reflect the DOJ's focus on enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.

Overall, healthcare fraud was responsible for two-thirds of the recovered amount in 2023.
 

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.