Regeneron has secured a significant courtroom victory that raises the legal threshold for U.S. authorities pursuing allegations of improper payments linked to its blockbuster eye drug, Eylea.
A federal appeals court ruled that prosecutors must prove not just that Regeneron engaged in kickbacks but that those alleged payments directly caused Medicare to fund prescriptions it otherwise would not have covered. This decision deals a blow to the government’s case, which argued that demonstrating the existence of kickbacks alone should be enough to establish wrongdoing.
The U.S. Department of Justice sued Regeneron in 2020, claiming the company funneled payments through a patient-assistance charity to cover Medicare co-pays, effectively ensuring that most patients paid nothing out-of-pocket for Eylea. While pharmaceutical firms are barred from covering Medicare patients’ co-pays directly, they can contribute to independent charities that provide such assistance. The government alleges that the charity in question was anything but independent, serving instead as a conduit for Regeneron to boost Eylea prescriptions.
The lawsuit falls under broader federal efforts to crack down on drugmakers’ relationships with patient-assistance charities, an issue that has already led to over $1 billion in settlements across the industry.
In a 2023 setback for prosecutors, a federal judge ruled that to prove a Medicare claim was fraudulent under the False Claims Act, the government must show it would not have been submitted “but for” the alleged kickback. This latest ruling from the 1st U.S. Circuit Court of Appeals upholds that interpretation, making the government’s path to a win significantly steeper.
Regeneron welcomed the decision, stating it looks forward to making its case before a jury. The Justice Department has yet to comment.
With Eylea bringing in nearly $6 billion of Regeneron’s $7.6 billion in product sales last year, the stakes remain high as the legal battle continues.
