United States Files Complaint Against Regeneron Pharmaceuticals Alleging Fraudulent Drug Price Reporting

BOSTON – The United States has filed a complaint under the False Claims Act (FCA) against Regeneron Pharmaceuticals, Inc. (Regeneron), a New York-based pharmaceutical company. The complaint alleges that Regeneron fraudulently manipulated Medicare reimbursement for its drug, Eylea, by knowingly submitting false average sales price (ASP) reports to Medicare. Medicare uses ASP to set its reimbursement rates for Eylea and other drugs. The complaint alleges Regeneron inflated Eylea’s ASP by paying credit card processing fees for the benefit of physician-customers purchasing Eylea, without properly reporting these payments as price concessions to ASP. Regeneron’s failure to properly report credit card fees as price concessions caused the submission of false claims for Eylea and hundreds of millions of dollars in inflated reimbursements by Medicare.

Regeneron manufactures and sells Eylea, an anti-vascular endothelial growth factor (anti-VEGF) inhibitor approved by the Food and Drug Administration to treat, among other conditions, neovascular (Wet) Age-Related Macular Degeneration (Wet AMD), a prevalent, usually age-related condition that impairs vision. Eylea is a leading Medicare expense, with payments of more than $25 billion between 2012 and 2023.

The United States alleges that Regeneron knew it was required to report all price concessions for Eylea, yet knowingly failed to include price concessions in the form of credit card processing fees that Regeneron paid to specialty drug distributors to benefit its customers. The United States alleges that Regeneron paid these credit card fees for Eylea purchases so that distributors would accept credit cards for physicians’ Eylea purchases while still charging those customers the lower cash price. These payments enabled Regeneron’s customers – typically retina and ophthalmic practices – to use credit cards to purchase Eylea without incurring an additional fee, while also taking advantage of the benefits of using credit cards, such as “cash back” and other credit card rewards. The United States alleges Regeneron internally attempted to disguise the payments as “bona fide service fees” (BFSFs), which are not considered price concessions, when it knew the payments were not BFSFs. 

“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 United States Attorney Joshua S. Levy. “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.”

“We will not permit pharmaceutical companies to flout price reporting requirements to maintain high drug prices,” said Principal Deputy Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to protecting federal health care programs from improper actions by drug companies or others that drive up the cost of those programs at the taxpayers’ expense.”  

“When drug companies submit average sales price reports to Medicare, those reports are expected to be truthful and accurate,” said Roberto Coviello, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General. “Reimbursement rate manipulation, as alleged in this complaint, threatens the integrity of the taxpayer-funded Medicare program, and we will thoroughly pursue such allegations.”

“Medicare, a crucial component of our nation’s health care system, draws from a finite pool of funds,” said Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “Today, Regeneron is accused of siphoning hundreds of millions of dollars of those funds to pad their profits on the backs of taxpayers. The FBI will continue to work with our partners to investigate and bring to justice those who we believe are willfully defrauding the U.S. government.”

The government’s investigation was prompted by False Claims Act allegations brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act. Under the FCA, private parties, known as relators, can file an action on behalf of the United States and receive a portion of the recovery. The FCA permits the United States to intervene in and take over the action, as it has done here. If a defendant is found liable for violating the FCA, the United States may recover three times the amount of its losses plus applicable penalties.

Acting U.S. Attorney Levy, AAG Boynton, HHS-OIG SAC Coviello and FBI SAC Cohen made the announcement today. Assistant U.S. Attorneys Diane Seol and Lindsey Ross of the Affirmative Civil Enforcement Unit along with Trial Attorneys Douglas J. Rosenthal, Asha M. Natarajan and Samuel R. Lehman of the Justice Department's Civil Division are handling the matter.