Another Kickback Scheme Busted: Regeneron’s “Patient Charity”

Yet another kickback scheme has been discovered in Boston, Massachusetts. Regeneron Pharmaceuticals, Inc. is being charged with violating federal anti-kickback laws by using a patient-assistance fund to encourage doctors to prescribe their drug, Eylea, over other less expensive competitors.

“Kickback schemes can undermine our health care system, compromise medical decisions, and waste taxpayer dollars,” said Phillip Coyne, the special agent in charge at the inspector general’s office in Boston for the Department of Health and Human Services.

Who is Regeneron?

Regeneron is an American biotechnology company that was founded in 1988 and is based in Tarrytown, New York. The company’s patient charity began, according to the lawsuit, with executives at Regeneron tracking the amount of money that was donated to the charity and directing it toward payments for their drug, Eylea, instead of competing products.

Their drug associated with this particular kickback scheme is called Eylea and is Regeneron’s top-selling drug. The drug alone brought the company more than $4.6 billion in 2019. Eylea treats a common eye disease in older people known as wet macular degeneration.

It competes with Lucentis, as well as Avastin, a similar drug also sold by Genentech. Although the three drugs have been found to have comparable efficacy, Avastin is much cheaper at $55 a dose, compared with $2,000 a dose for Lucentis and $1,850 for Eylea, according to the federal lawsuit.

This is not the first time the drug company has been accused of a kickback scheme. In 2019, the charity that Regeneron used to operate its patient assistance program, the Chronic Disease Fund, paid $2 million to resolve allegations that it had served as a conduit to companies paying kickbacks to Medicare patients taking their drugs. That settlement involved its work with five other companies: Novartis, Dendreon, Astellas, Onyx, and Questcor. (Since then, the charity has been renamed Good Days, to be removed from the scandal and has never commented on accusations.)

Medicare and kickback schemes

Drug companies have long used financial assistance such as coupons to cover drug co-payments to ease the financial burden on individual patients, and insurers then typically cover the rest of the cost. 

Federal anti-kickback laws prohibit companies from giving such assistance to Medicare and Medicaid beneficiaries though, because the practice is considered a “kickback,” to buy their drugs. 

For years, drugmakers have dodged those laws by donating to non-profit charities, which then give the money to Medicare patients. The arrangements are legal as long as there is no direct coordination between the pharmaceutical company and the nonprofit organization.

Just one of many kickback schemes

Regeneron is only the latest company to come under federal scrutiny for its use of charities to cover patients’ drug costs. We covered Sanofi’s nearly $12 million from Medicare Kickback Scheme this year already. In 2018, Johnson & Johnson agreed to pay $360 million to settle allegations that a company funneled illegal kickbacks through a charity. In 2017, United Therapeutics paid $210 million to settle similar allegations. The use of patient-assistance charities as kickback schemes is not new in the drug manufacturing business, as several other drugmakers have admitted to undergoing similar investigations.

Regeneron claims “not guilty”

Regeneron has defended all allegations related to contributions to the said patient assistance charity. 

“It is unfortunate that the government chose to bring these baseless allegations related to our 2013 and early 2014 patient assistance donations at a time when Regeneron employees have been coming to work in the epicenter of the Covid-19 pandemic with the goal of providing an effective treatment,” said Joseph LaRosa, the executive vice president, general counsel and secretary of Regeneron. 

“We look forward to having our case heard and will file a motion to dismiss,” added LaRosa.

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