Regeneron Pharmaceuticals hiked the price of its big-selling drug Eylea and spurred its sales by using a charitable foundation to cover Medicare patients’ out-of-pocket costs for the pricey drug, according to a civil suit filed Wednesday by the U.S. Department of Justice.
The $75 million that Regeneron paid the charity to subsidize patient co-payments from 2013 to 2014 were illegal kickbacks that violated the federal False Claims Act, alleged the government’s complaint in the U.S. District Court of Massachusetts.
The case is the latest of many brought by the federal government after Barron’s first exposed such co-pay arrangements nearly seven years ago. The government has recovered nearly $850 million in settlements with other drugmakers.
Regeneron declined to respond to Barron’s questions about the allegations in the Justice Department’s complaint. In a press release Wednesday, Regeneron said that its charitable donations were lawful and vowed to vigorously defend itself. It also claimed the suit will hamper Regeneron’s efforts to fight Covid-19.
“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 Regeneron general counsel Joseph LaRosa. “Regeneron’s donations to independent charity foundations help elderly patients access medicines that are prescribed by their physicians.”
Regeneron stock (ticker: REGN) dipped 5% Wednesday after the government filed the suit, though the shares closed up 2.5% in Thursday trading, at $620. The company’s sales of products like Eylea and its work on Covid treatments have lifted the stock by more than 65% this year.
Eylea treats macular degeneration, a disorder that erodes the eyesight of many elderly people. The product was Regeneron’s first big product and remains its bestseller, contributing $4.6 billion of the company’s $7.9 billion in revenue last year. Like the competing product Lucentis from Roche Holding’s (ROG.Switzerland) Genentech, Eylea is expensive. It typically costs over $10,000 a year, and the government’s lawsuit says that Medicare has spent over $11.5 billion on the drug since 2013.
Government programs and commercial insurers require patients to pay part of a drug’s cost to curb needless treatment and restrain drug-company pricing. But a 20% co-pay on a $10,000 drug amounts to $2,000. That would leave many Medicare beneficiaries unable to afford to fill their prescriptions.
So the drug industry became the biggest donors to nonprofit charities that subsidize drug co-payments for patients. Freed from cost concerns, doctors and patients could choose expensive drugs whose high-price tag got passed on to government payers. Over the past decade, federal programs have seen their drug spending soar as drug companies raised prices and utilization grew.
While co-pay charities obviously help indigent patients afford treatment, federal officials and many doctors fear that some co-pay programs are disguised ways of getting patients to choose unnecessarily expensive treatments, in violation of the anti-kickback provisions of the federal False Claims Act. Government regulators told the industry that such arrangements were legal only if a drugmaker’s contributions weren’t directly tied to a charity’s spending on the drugmaker’s product and the product’s market share.
The false-claims charges filed by the U.S. Attorney for the District of Massachusetts, Andrew Lelling, say that Regeneron executives discussed how the company’s donations to a co-pay charity called the Chronic Disease Fund would yield a fourfold return on investment by boosting demand and allowing a higher price for Eylea. Exhibited with the complaint are emails, spreadsheets, and slide presentations that the government says are evidence that the Regeneron tied its contributions to Eylea’s market share.
As proof that the co-pay arrangement led Regeneron to put a higher price on Eylea, the complaint includes materials from the company’s consultations with marketing experts at AmerisourceBergen unit Xcenda before the drug’s 2011 launch.
At the time, Regeneron had been considering a price of $1,500 per injection, but the government’s complaint shows a presentation from Xcenda advising that Regeneron could charge $1,950 if co-payments were subsidized by a charity. The increased demand and higher payments from Medicare, said the Xcenda slides, would offset the expense of Regeneron’s contributions—which were also tax-deductible.
The AmerisourceBergen consultants warned, however, that “increasing the price per injection may create more push back from payers and providers,” according to the exhibited slides.
Regeneron ultimately decided to price Eylea at $1,850 per injection, which the government alleges was 23% higher than its initial plan. AmerisourceBergen declined to comment to Barron’s.
The government’s safe-harbor rules for co-pay charities say that a drugmaker can’t restrict its donations to covering just its product. But Wednesday’s complaint says Regeneron was only willing to pay the Chronic Disease Fund enough to cover co-pays for Eylea patients. A chart in the complaint shows that Regeneron’s payments to the charity closely tracked the charity’s spending on Eylea co-pays. The government alleges that the charity sent spreadsheets to Regeneron, asking for specific amounts to fund levels of Eylea demand and market share.
The Chronic Disease Fund settled a separate anti-kickback case brought by the federal government in 2019 concerning co-pay programs for Dendreon, Astellas Pharma, Novartis, the Amgen unit Onyx Pharmaceuticals, and the Mallinckrodt subsidiary Questcor. The charity’s dealings with Questcor were a focus of Barron’s reporting in 2013.
The charity, which now calls itself Good Days, didn’t respond to Barron’s requests for comment. In its 2019 settlement, the charity agreed to pay a $2 million penalty without admitting wrongdoing under the anti-kickback law. At the time, it said: “The settlement reflects the organization’s desire to move forward and concentrate on providing assistance to people in need of lifesaving and life-extending treatments.”
Regeneron first disclosed the anti-kickback investigation in 2017. A number of other drugmakers have since settled similar civil cases, paying a cumulative $841 million while denying wrongdoing. Those companies include Johnson & Johnson, Amgen, Pfizer, and United Therapeutics.
Write to Bill Alpert at william.alpert@barrons.com
"pay" - Google News
June 26, 2020 at 08:41PM
https://ift.tt/2VlYMTg
Regeneron Used a Charity to Pay Kickbacks, Justice Department Alleges - Barron's
"pay" - Google News
https://ift.tt/301s6zB
Bagikan Berita Ini
0 Response to "Regeneron Used a Charity to Pay Kickbacks, Justice Department Alleges - Barron's"
Post a Comment