Regeneron Pharmaceuticals, Inc. manufactures Eylea. Eylea is one of just a few drugs approved by the Food and Drug Administration (FDA) for treating an ophthalmological condition called neovascular age-related macular degeneration, also known as wet AMD. Eylea is a “buy and bill” drug under Medicare Part B. This means that physicians buy the drug, prescribe it, administer it in their offices, and then submit a reimbursement claim to Medicare. It also means that Eylea is subject to Part B’s cost-sharing requirement: Medicare covers eighty percent of the cost while the patient pays the remaining twenty percent.
Eylea is expensive. Since 2013, Medicare Part B has spent over $11.5 billion on Eylea. A single injection costs $1,850. Because a patient requires multiple injections per year, annual per-patient co-pays routinely exceed $2,000. For some
patients, that co-pay can deter the patients from using Eylea. And while only a few drugs are FDA-approved to treat wet AMD, at least one other drug that is much cheaper than Eylea is available for off-label use.
These economics create an incentive for Regeneron to price Eylea in a way that frees the patient from the co-pay. An
injection that sells for $1,850 with a $330 co-pay will likely sell less well than an injection that costs $2,000 with no co-pay. Of course, the insurer — not the manufacturer — sets the co-pay (to ensure that the patient has economic skin in the game when deciding whether to use the drug). But if the patient knows that the manufacturer will rebate that co-pay, that is more or less equivalent to having no co-pay.
The federal Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, prohibits kickbacks. A rebate by the manufacturer to the patient or doctor would be a kickback. So some creative manufacturers have tried a less direct work-around
by supporting charitable foundations that help patients with copays. The manufacturer gives the foundation a donation, and the foundation gives patients (or doctors) the co-pay.
Such an arrangement can easily be seen as a conduit for manufacturer rebates. The Department of Health and Human Services therefore issued guidance attempting to differentiate truly independent co-pay assistance charities from
rebate conduits. The government alleged that Regeneron crossed well into the conduit side of that difference when it paid more than $60 million over the course of four to five years to the Chronic Disease Fund (CDF), a foundation that provides copayment assistance to patients suffering from wet AMD.
A 2010 amendment to the AKS provides that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” 42 U.S.C. § 1320a-7b(g). In other words, an “AKS violation that results in a federal [healthcare] payment is a per se false claim under the FCA.”
The United States Court of Appeals for the First Circuit stated in its February 18, 2025 decision: “The government cannot show that the text of the 2010 amendment itself contraindicates a but-for causation standard. Simply put, there is no language in the 2010 amendment that by itself runs counter to the presumption that “resulting from” calls
for proof of but-for causation … it also makes sense for the 2010 amendment to render a claim false (for FCA purposes) only when a kickback is the cause of that claim’s submission to the government.”
“By its own terms, the 2010 amendment requires some proof of causation; the only question is what type of causation. On that question, the statutory history provides no reason to deviate from the ordinary course, in which we treat “resulting from” as requiring but-for causation.”
“In sum, we find no convincing “textual or contextual” reason to deviate from the default presumption that the phrase
“resulting from” as used in the 2010 amendment imposes a but-for causation standard. We therefore hold that, to demonstrate falsity under the 2010 amendment, the government must show that an illicit kickback was the but-for cause of a submitted claim.”
Source United States of America v. Regeneron Pharmaceuticals, Inc., No. 23-2086.
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