New York-based Regeneron Pharmaceuticals, manufacturer and seller of the macular degeneration drug Eylea, is being sued by the Department of Justice (DOJ) for allegedly flouting Medicare’s price reporting requirements.
Regeneron failed to report applicable price concessions in the form of credit card processing fees to the Centers for Medicare and Medicaid Services (CMS), the DOJ claimed in a press release Wednesday.
The lawsuit was originally filed under the qui tam provisions of the False Claims Act by two former Regeneron employees. The United States intervened in the case, which is permitted under the act. If found liable, Regeneron could pay treble damages, plus penalties.
The details: Regeneron fraudulently inflated Medicare reimbursement rates for Eylea by knowingly submitting false average sales price (ASP) reports to the CMS, the DOJ alleged in its complaint, filed in U.S. District Court for the District of Massachusetts.
In accordance with the government’s price reporting requirements, Regeneron submitted quarterly ASP reports for Eylea to the CMS but failed to deduct price concessions as required by law.
The company deliberately chose not to report payments as price concessions “to maintain a steady and inflated ASP for Eylea, which in turn ensured steady—and inflated—Medicare reimbursement rates for Eylea,” the DOJ stated.
Internally, the company allegedly discussed if payments could qualify as bona fide service fees (BFSF), which are not considered price concessions, despite its knowing the payments failed to meet all the relevant requirements.
Compliance considerations: Regeneron failed to follow its own internal compliance documents for BFSF that listed the relevant requirements. As part of the process, it created its own standard concerning “‘common industry terms’” that had no basis in the BFSF test, the DOJ alleged.
Further, Regeneron purportedly required so-called “client approvers” to sign off on its ASP assumptions but did not perform any BFSF analyses to substantiate its conclusions prior to approving them, the DOJ said.
In February 2018, a client approver allegedly asked a consultant, “‘[D]id we ever do anything on credit card fees to substantiate that they were BFSF?’”
Regeneron did not respond to a request for comment. The DOJ acknowledged its claims are allegations only and there has been no determination of liability.
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