U.S. claims Regeneron paid kickbacks via charity to boost expensive drug

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BOSTON (Reuters) – The U.S. Justice Department on Wednesday sued Regeneron Pharmaceuticals Inc (O:REGN), accusing it of using a charity that helps cover Medicare patients’ drug costs as a means to pay kickbacks for using its expensive macular degeneration drug Eylea.

The government filed a lawsuit against the company in federal court in Boston, the latest case to result from an industry-wide probe of drugmakers’ financial support of patient assistance charities.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in the government healthcare program for those aged 65 and older. Companies may donate to non-profits providing co-pay assistance as long as they are independent.

But the lawsuit said Tarrytown, New York-based Regeneron following the launch of Eylea in 2011 began funneling tens of millions of dollars through a patient assistance foundation to ensure virtually no one on Medicare had to pay co-pays.

The lawsuit said the scheme helped Regeneron boost sales for the drug, which typically costs over $10,000 per year. From 2013 to 2014, when the scheme was operating, Medicare paid $1.9 billion for Eylea, the lawsuit said.

Regeneron in a statement said it would vigorously defend itself. “We do not believe there is any merit to the complaint,” the company said.

Its stock price midday Wednesday was $604.62, down 3.84%.

The lawsuit follows an investigation that has resulted in more than $865 million in settlements with drugmakers and charities, including the foundation the government says Regeneron used, Good Days, previously known as the Chronic Disease Fund.

Good Days in October agreed to pay $2 million to resolve allegations it conspired with five other companies including Novartis AG to enable them to pay kickbacks to Medicare patients using their drugs. It did not admit wrongdoing.

The case is U.S. v. Regeneron Pharmaceuticals Inc, U.S. District Court, District of Massachusetts, No. 20-11217.