Michigan AG Nessel Accuse Regeneron of Multi-Million Dollar Medicaid Scam

Photo byOffice of the Michigan Attorney General

Lansing, Michigan - In a significant move against corporate fraud, Michigan Attorney General Dana Nessel, along with attorneys general from five other states, has filed a federal lawsuit against Regeneron Pharmaceuticals. The New York-based pharmaceutical company stands accused of inflating drug prices, resulting in substantial financial losses to state Medicaid programs.

The lawsuit, which was filed on June 25 in the U.S. District Court for the District of Massachusetts, alleges that Regeneron engaged in deceptive practices regarding the pricing of Eylea, a drug used to treat macular degeneration and other serious eye conditions. The attorneys general of Colorado, Georgia, North Carolina, Texas, and Washington joined Michigan in this legal action, reflecting a nationwide concern over Medicaid fraud.

The Allegations

According to the complaint, Regeneron manipulated the reported Average Sales Price (ASP) of Eylea to the Centers for Medicare and Medicaid Services (CMS). Medicaid programs in the six states collectively spent over $175 million on Eylea between 2013 and 2023. The states claim that Regeneron failed to include certain price concessions in its ASP reporting, specifically credit card processing fees paid to distributors. These fees enabled doctors and retina practices to use credit cards without incurring additional costs, thus allowing them to earn substantial "cash back" rewards.

By not including these fees in their ASP reporting, Regeneron allegedly inflated the reimbursement rates that Medicaid paid for Eylea, leading to tens of thousands of false claims and millions of dollars in losses for the states.

Statements and Reactions

"Regeneron’s fraudulent scheme siphoned millions from taxpayers and jeopardized the integrity of the Medicaid program," said AG Nessel. "I am proud to join attorneys general from across the country in holding accountable those who exploit our health care system and defraud public dollars."

The lawsuit was initially brought to light by a whistleblower case, with the U.S. Department of Justice already pursuing actions under the federal False Claims Act. The states are seeking monetary damages and penalties under their respective false claims acts or other state laws.

The Role of HCFD

The Attorney General’s Health Care Fraud Division (HCFD) is spearheading this case for Michigan. The HCFD, which serves as Michigan's Medicaid Fraud Control Unit, is significantly funded by the U.S. Department of Health and Human Services, receiving $5,541,992 for fiscal year 2024. The State of Michigan contributes an additional $1,847,326.

This high-profile case underscores the ongoing efforts of state and federal authorities to combat health care fraud and protect public funds. The outcome of this lawsuit could have far-reaching implications for Medicaid programs and pharmaceutical pricing practices nationwide.