Regeneron Pharmaceuticals has secured a favorable ruling in a case involving allegations of illegal kickbacks through a charity to promote its expensive eye drug, Eylea. The 1st U.S. Circuit Court of Appeals has set a higher legal standard for the U.S. government to meet in its lawsuit, requiring proof that the alleged kickbacks directly caused Medicare to make payments for Eylea that would not have otherwise been made.
In a unanimous decision issued on Tuesday, the three-judge panel found that the government must demonstrate that the kickbacks led to Medicare payments that would not have occurred without the alleged illegal arrangement. This ruling significantly raises the bar for the government, which had argued that merely proving the presence of kickbacks would be sufficient to establish that the claims were fraudulent.
Regeneron expressed satisfaction with the court’s decision, stating it looks forward to presenting its case to a jury. The U.S. Department of Justice, which filed the lawsuit in 2020, did not immediately respond to requests for comment.
Eylea, which treats macular degeneration and costs nearly $2,000 per injection, is Regeneron’s top-selling drug, contributing nearly $6 billion to the company’s total product sales of $7.6 billion in the previous year.
The lawsuit accuses Regeneron of paying kickbacks through a charity that helped cover Medicare patients’ co-payments, which is prohibited by federal law. Drug companies are allowed to donate to independent non-profits that assist with co-payments, but the government claims the charity in this case was not truly independent. Instead, it allegedly acted as a conduit for Regeneron to ensure Medicare patients did not have to pay co-pays, thus encouraging the use of Eylea.
The U.S. government claims these actions violated the 2010 amendment to the federal Anti-Kickback Statute, which mandates that claims for treatments resulting from illegal kickbacks are considered false or fraudulent under the False Claims Act.
The case marks a significant legal precedent, with the 1st Circuit agreeing with the earlier decision of Chief U.S. District Court Judge F. Dennis Saylor, who ruled that the government must meet a “but for” causation standard. In other words, it must prove that Medicare claims for Eylea would not have been made in the absence of the kickbacks. Circuit Judge William Kayatta emphasized that “resulting from” cannot be interpreted to mean a mere connection without causality, rejecting the government’s argument for a broader standard.
The case, titled United States v. Regeneron Pharmaceuticals (1st U.S. Circuit Court of Appeals, No. 23-2086), continues to be closely watched as part of ongoing investigations into the use of assistance charities by drugmakers.
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