Feds charge Regeneron with cheating Medicare out of millions: Regeneron’s statement

The federal Department of Justice (DOJ) has filed a complaint in U.S. District Court in Massachusetts alleging that Tarrytown-based Regeneron has fraudulently inflated Medicare reimbursement rates for its drug Eylea, used to treat age-related macular degeneration.

The DOJ alleges that Regeneron paid credit card charge fees for customers who bought the drug but did not adjust the final prices it said its customers had paid when it reported the figures to Medicare. By paying the credit card fees, Regeneron was providing discounts for the customers, according to the DOJ. By not deducting its payments of card fees from the prices it reported as customers having paid the DOJ says that Regeneron inflated the numbers it reported to Medicare.

In a statement, Regeneron told the Business Journal, “Regeneron believes that the allegations against us are without merit. The complaint, which follows a Civil Investigative Demand from the U.S. Department of Justice in June 2021, and which the Company previously disclosed, relates to the Company’s lawful reimbursement of costs incurred by our specialty distributors. The Government’s complaint demonstrates a fundamental misunderstanding of drug price reporting standards. Regeneron has fully cooperated with the Government’s investigation and will vigorously defend itself in court.”

“From 2012 to 2021, Regeneron’s credit card fee reimbursements for Eylea purchases exceeded $250 million to just one of its several distributors. 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 DOJ complaint says. “Regeneron’s subsidy payments were price concessions that Regeneron should have included in its price reporting to CMS (Centers for Medicare & Medicaid Services) for Eylea. 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 DOJ alleges that Regeneron’s conduct, and the resulting harm to Medicare, is ongoing.

“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.”

In addition to the DOJ, the complaint names two individuals as plaintiffs, Julianne Nunnelly and Matthew Shanks. Nunnelly is a former regional sales director at Regeneron and Shanks is a former director of analytics at Regeneron. The lawsuit was filed under whistleblower provisions of the False Claims Act. If the action is successful in obtaining a recovery from Regeneron, Nunnelly and Shanks would be eligible to collection a portion of the amount.