Regeneron Pharmaceuticals Sued Due to Alleged Pricing Scheme

Humana Inc. filed suit against Regeneron Pharmaceuticals, Inc. Thursday in the Southern District of New York over allegations that the pharmaceutical company engaged in a scheme with the Chronic Disease Foundation. The plaintiff claims that as a result of this purported scheme, which they believe is a “sham charity,” the two parties defrauded Medicare and its contracted payors out of hundreds of millions of dollars.

The complaint concerns Eylea, explained as a an age-related macular degeneration drug produced by Regeneron that generates billions of dollars in revenue annually and is the top-selling drug of its kind in the country. The plaintiff said that Regeneron inflated the price of Eylea and then provided illegal kickbacks to the CDF, which then used the tainted donations they received from Regeneron to cover cost-sharing obligations for patients so that they would continue to choose Eylea rather than its less expensive alternatives.

Eylea’s inflated price is described as cost-prohibitive for the majority of patients at $10,000 for one year of treatment. The complaint compared Eylea’s price to a competitor drug which is allegedly as effective at 3% of the price. Patients were able to “obtain Eylea at no cost to them instead of choosing drugs offered by Regeneron’s competitors which were otherwise significantly cheaper.”

By inflating the price of Eylea, Regeneron relied on Medicare and other payors to pay for the vast majority of the drug’s inflated price. Regeneron’s unlawful profits have cost the defendant significantly since they often “bear the cost of spending for patients enrolled in Medicare plans.” Humana claims they have paid over $900 million to cover the cost of Eylea for patients. A DOJ investigation into Regeneron’s conduct revealed that their scheme violated the False Claims Act, the Federal Anti-Kickback Statute, and various state laws.

The complaint includes counts of fraud, fraud concealment, tortious interference with contract, aiding and abetting tortious conduct, violation of RICO, conspiracy to violate RICO, unjust enrichment, violation of the New York General Business Law and other state deceptive trade practices laws, and violations of state insurance fraud laws.

The plaintiff is represented by Robins Kaplan.