Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 1 of 36
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
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`COMPLAINT
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`1.
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`Since 2013, the Medicare Part B program has spent over $11.5 billion on Eylea,
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`an injectable macular degeneration drug that typically costs over $10,000 per year. In 2013 and
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`2014 alone, Medicare paid $1.9 billion for the drug. Eylea’s manufacturer, Regeneron
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`Pharmaceuticals, Inc. (“Regeneron”), achieved these sales in part by funneling tens of millions of
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`dollars through a co-pay foundation, the Chronic Disease Fund (“CDF”), to ensure that virtually
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`no Medicare patient paid a co-pay, deductible, or co-insurance amount (collectively referred to
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`herein as a “co-pay”) on Eylea and that physicians who prescribed and purchased the drug did
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`not have to collect Medicare co-pays from their patients.
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`2.
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`Before Regeneron began selling Eylea in late 2011, it considered a price range of
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`$1,500 to $1,950 per injection for the drug. Ultimately, the company chose a price – $1,850 – at
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`the higher end of that range because it knew that it could eliminate any financial burden that the
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`higher price would impose on Medicare patients and their physicians simply by paying more to a
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`foundation that would cover the proportionately higher Medicare co-pays for Eylea. As a
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`marketing consultant for Regeneron advised the company in the spring of 2011, “[t]he overall
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`financial impact considering revenue of increasing price [of Eylea] . . . is largely favorable to
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`Civ. No. 20-11217
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`UNITED STATES OF AMERICA,
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`Plaintiff,
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`v.
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`REGENERON PHARMACEUTICALS, INC.,
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`Defendant.
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 2 of 36
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`Regeneron, since the revenue increase will offset the increase in the budget needs to run the
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`[foundation co-pay] program.”
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`3.
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`The following year, as sales of Eylea began to ramp up, Regeneron considered
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`how much to pay Chronic Disease Fund (“CDF”), a purportedly “independent” foundation which
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`operated a fund that covered Medicare co-pays for macular degeneration drugs. At the time,
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`Regeneron and Genentech, which sold Lucentis, were the leading manufacturers of macular
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`degeneration drugs. Regeneron’s senior management was only willing to pay CDF enough to
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`cover Medicare co-pays for Eylea patients; as Regeneron’s former Chief Financial Officer,
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`Murray Goldberg, put it, Lucentis patients were “Genentech’s problem.” Moreover, Regeneron
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`senior management wanted assurances that the company’s payments to CDF would generate
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`return on investment, or “ROI.”
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`4.
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`To satisfy senior management, Regeneron employees repeatedly contacted CDF
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`to learn the amount of money CDF would need to cover the co-pays of Eylea patients only.
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`They then determined the Medicare revenue that Regeneron would derive from those patients
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`and calculated that the company would earn a return of over 400% on its payments to CDF.
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`Over the course of 2013 and through the beginning of 2014, Regeneron paid CDF exactly what
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`CDF said it needed to cover Medicare expenses for Eylea patients only.
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`5.
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`Because the anti-kickback statute, 42 U.S.C. § 1320-7b(b), prohibits such
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`“indirect” kickbacks to subsidize the price of a drug reimbursed by Medicare, Regeneron’s
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`conduct was illegal, and senior management knew it. During 2013, company auditors twice
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`inquired about the information Regeneron was getting from CDF about Eylea. Both times,
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`Regeneron management, including the company’s commercial chief, Robert Terifay, lied and
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`asserted that the company was not getting Eylea-specific data from CDF. In fact, as Terifay and
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 3 of 36
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`others knew, the company was getting frequent Eylea-specific reports from CDF and then using
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`that data to correlate the company’s payments to CDF with the foundation’s spending on co-pays
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`for Eylea. Regeneron’s payments to CDF were not charity; rather, the company intended those
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`payments to subsidize Eylea’s high price for Medicare patients and to ensure that physicians
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`would not have to worry about collecting co-pays on Eylea from their Medicare patients.
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`Jurisdiction and Venue
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`6.
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`This action arises under the False Claims Act (“FCA”), as amended, 31 U.S.C.
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`§§ 3729-33. This Court has jurisdiction over this action under 31 U.S.C. § 3730(a) and 28
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`U.S.C. §§ 1345 and 1367(a).
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`7.
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`Venue is proper in the District of Massachusetts pursuant to 28 U.S.C. § 1391(b)
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`and 31 U.S.C. § 3732(a).
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`8.
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`This Court may exercise personal jurisdiction over Regeneron pursuant to 31
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`U.S.C. § 3732(a) and because the company transacts business in this District.
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`The Parties
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`9.
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`Plaintiff United States, acting through the Department of Health and Human
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`Services (“HHS”), administers the Health Insurance Program for the Aged and Disabled
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`established by Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395, et seq. (Medicare).
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`10.
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`Defendant Regeneron is a manufacturer and seller of pharmaceutical products,
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`including Eylea. Regeneron has its principal place of business at 777 Old Saw Mill River Road,
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`Tarrytown, NY 10591. Regeneron conducts business nationwide.
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`Legal Background
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`The Medicare Part B Program and Co-Pays Under Medicare Part B
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`11.
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`Congress established Medicare in 1965 to provide health insurance coverage for
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`people aged sixty-five or older and for people with certain disabilities or afflictions. See 42
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`U.S.C. §§ 1395 et seq.
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`12. Medicare is funded by the federal government and administered by the Centers
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`for Medicare and Medicaid Services (“CMS”), which is part of HHS.
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`13. Medicare Part B primarily covers outpatient medical services and physician-
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`administered drugs, like Eylea.
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`14.
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`Once beneficiaries meet their annual deductible (currently $198), Medicare Part B
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`pays 80 percent of the cost of prescription drugs administered by a physician in an outpatient
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`setting. 42 U.S.C. § 1395l(a)(1). Some Medicare beneficiaries purchase a supplemental
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`insurance product, called a Medigap plan, to cover the remaining 20 percent co-pay. Others are
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`responsible for covering that co-pay directly.
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`15.
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`Congress incorporated co-pays into Medicare to give patients an incentive to
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`choose the most cost-effective therapy. As the Department of Health and Human Services,
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`Office of the Inspector General observed in a 1994 Special Fraud Alert, “[s]tudies have shown
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`that if patients are required to pay even a small portion of their care, they will be better health
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`care consumers, and select items or services because they are medically needed, rather than
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`simply because they are free.” Available at
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`https://oig.hhs.gov/fraud/docs/alertsandbulletins/121994.html.
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`16. When a physician administers a drug covered by Medicare Part B, the physician
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`typically submits a claim to Medicare for the drug. Medicare then will reimburse the physician
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`106 percent of the average sales price of the drug, less the applicable Medicare Part B co-pay.
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`See 42 U.S.C. § 1395w–3a(b). The physician is responsible for collecting the co-pay amount
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`from the patient.
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 5 of 36
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`The False Claims Act
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`17.
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`The FCA provides, in pertinent part, that any person who:
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`(A) knowingly presents, or causes to be presented, a false or fraudulent claim for
`payment or approval; [or]
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`(B) knowingly makes, uses, or causes to be made or used, a false record or
`statement material to a false or fraudulent claim;
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`. . . is liable to the United States Government for a civil penalty of not less than
`$5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties
`Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-410),
`plus 3 times the amount of damages which the Government sustains because of
`the act of that person.
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`31 U.S.C. § 3729(a)(1).
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`18.
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`For purposes of the FCA, the terms “knowing” and “knowingly” mean that a
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`person, with respect to information: (i) has actual knowledge of the information; (ii) acts in
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`deliberate ignorance of the truth or falsity of the information; or (iii) acts in reckless disregard of
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`the truth or falsity of the information. No proof of specific intent to defraud is required. 31
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`U.S.C. § 3729(b)(1).
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`19.
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`The FCA defines the term “claim,” in pertinent part, as
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`any request or demand, whether under a contract or otherwise, for money or
`property and whether or not the United States has title to the money or property,
`that (i) is presented to an officer, employee, or agent of the United States; or (ii) is
`made to a contractor, grantee, or other recipient, if the money or property is to be
`spent or used on the Government’s behalf or to advance a Government program
`or interest, and if the United States Government--(I) provides or has provided any
`portion of the money or property requested or demanded; or (II) will reimburse
`such contractor, grantee, or other recipient for any portion of the money or
`property which is requested or demanded[.]
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`31 U.S.C. § 3729(b)(2).
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`For purposes of the FCA, the term “material” means “having a natural tendency to
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`20.
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`influence, or be capable of influencing, the payment or receipt of money or property.” Id. at
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 6 of 36
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`§ 3729(b)(4).
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`The Anti-Kickback Statute
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`21.
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`The anti-kickback statute, 42 U.S.C. § 1320a-7b(b), arose out of Congressional
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`concern that payoffs to those who can influence health care decisions would result in goods and
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`services being provided that are excessively costly, medically unnecessary, of poor quality, or
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`potentially harmful to patients. To protect the integrity of Federal health care programs from
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`these difficult-to-detect harms, Congress enacted a per se prohibition against the payment of
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`kickbacks in any form, regardless of whether the particular kickback gives rise to overutilization,
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`poor quality of care, or patient harm. In particular, when determining what conduct to prohibit,
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`Congress determined that the inducements at issue would “contribute significantly to the cost” of
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`federal health care programs absent federal penalties as a deterrent. H.R. Rep. No. 95-393, at 53
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`(1977), reprinted in 1977 U.S.C.C.A.N. 3039, 3056. First enacted in 1972, Congress
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`strengthened the anti-kickback statute in 1977, 1987, and 2010 to ensure that kickbacks
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`masquerading as legitimate transactions did not evade its reach. See Social Security
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`Amendments of 1972, Pub. L. No. 92-603, §§ 242(b) and (c); 42 U.S.C. § 1320a-7b, Medicare-
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`Medicaid Antifraud and Abuse Amendments, Pub. L. No. 95-142; Medicare and Medicaid
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`Patient and Program Protection Act of 1987, Pub. L. No. 100-93; Patient Protection and
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`Affordable Care Act, Pub. L. No. 111-148.
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`22.
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`The anti-kickback statute prohibits any person or entity from offering, making,
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`soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or
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`reward any person for purchasing, ordering, or recommending or arranging for the purchasing or
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`ordering of federally-funded medical goods or services:
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`(b) Illegal remunerations
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`(2) whoever knowingly and willfully offers or pays any remuneration (including any
`kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind
`to any person to induce such person--
`(A) to refer an individual to a person for the furnishing or arranging for the furnishing
`of any item or service for which payment may be made in whole or in part under a
`Federal health care program, or
`(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or
`ordering any good, facility, service, or item for which payment may be made in whole
`or in part under a Federal health care program, shall be guilty of a felony and upon
`conviction thereof, shall be fined not more than $25,000 or imprisoned for not more
`than five years, or both.
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`42 U.S.C. § 1320a-7b(b)(2). Violation of the anti-kickback statute also can subject the
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`perpetrator to exclusion from participation in federal health care programs and civil monetary
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`penalties. 42 U.S.C. § 1320a-7b(b)(2); 42 U.S.C. § 1320a-7(b)(7); 42 U.S.C. § 1320a-7a(a)(7).
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`23.
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`The anti-kickback statute defines remuneration to include anything of value,
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`including “cash” and “in-kind” payments or rebates. 42 U.S.C. § 1320a-7b(b)(2). Money and
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`other forms of financial subsidies that can be used to pay or waive Medicare co-pays constitute
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`remuneration under the anti-kickback statute.
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`24.
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`The anti-kickback statute defines a “Federal health care program” to mean “any
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`plan or program that provides health benefits, whether directly, through insurance, or otherwise,
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`which is funded directly, in whole or in part, by the United States Government,” except for the
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`health insurance program for federal employees under 5 U.S.C. §§ 8901 et seq. 42 U.S.C.
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`§ 1320a-7b(f). Medicare is a “Federal health care program” for purposes of the anti-kickback
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`statute.
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`25.
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`The anti-kickback statute provides that, “[w]ith respect to violations of this
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`section, a person need not have actual knowledge of this section or specific intent to commit a
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`violation of this section.” 42 U.S.C. § 1320a-7b(h).
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 8 of 36
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`26.
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`In 2010, Congress amended the anti-kickback statute to include language that
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`reaffirmed prior case law and provided that any Medicare claim “that includes items or services
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`resulting from a violation of [the anti-kickback statute] constitutes a false or fraudulent claim for
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`purposes of [the False Claims Act].” 42 U.S.C. § 1320a-7b(g). Under this provision, claims
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`submitted to federal health care programs that result from violations of the anti-kickback statute
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`are per se false or fraudulent within the meaning of 31 U.S.C. § 3729(a). Accordingly, a person
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`violates the False Claims Act when he or she knowingly submits, or causes to be submitted, a
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`claim to a federal health care program that results from a violation of the anti-kickback statute.
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`27.
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`Compliance with the anti-kickback statute is material to CMS’s decision to pay a
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`Medicare claim.
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`Factual Allegations
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`Background on Regeneron and Eylea
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`28.
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`Leonard Schleifer founded Regeneron in 1988. For the company’s first 20 years,
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`it primarily focused on clinical research. In 2008, the Food and Drug Administration (“FDA”)
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`approved Regeneron’s first commercial product, Arcalyst.
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`29.
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`In November 2011, FDA approved Eylea to treat neovascular (wet) age-related
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`macular degeneration (“AMD”), a disease that afflicts millions of elderly people around the
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`world. Physicians administer Eylea by injection in the office. The recommended dose is 2 mg
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`per eye once a month for the first 12 doses, and about 6 to 7 times per year thereafter. The list
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`price of Eylea is $1,850 per dose, so the annual cost is typically well over $10,000 and the
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`associated Medicare Part B co-pays owed by patients are well over $2,000 per year. Even
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`patients with Medigap often face annual deductibles of several hundred dollars the first time they
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`take Eylea each year.
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`30.
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`Eylea has two principal competitors, Avastin and Lucentis, both made by
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`Genentech. Avastin and Lucentis are chemically similar drugs, but FDA has approved Avastin
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`to treat certain types of cancer and it comes in 4 ml and 16 ml vials, while FDA has approved
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`Lucentis to treat various eye conditions and it comes in .5 ml vials. Because Lucentis is much
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`more expensive than Avastin per milliliter, ophthalmologists sometimes use Avastin off-label:
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`compounding pharmacies buy Avastin vials and divide them into smaller doses for injection into
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`the eye, which ophthalmologists purchase. Eylea, Lucentis, and Avastin all have comparable
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`efficacy. See generally National Eye Institute, Avastin as Effective as Eylea for Treating Central
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`Retinal Vein Occlusion (May 9, 2017), available at https://www.nei.nih.gov/about/news-and-
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`events/news/avastin-effective-eylea-treating-central-retinal-vein-occlusion; National Institutes of
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`Health, Avastin and Lucentis Are Equivalent in Treating Age-Related Macular Degeneration
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`(Apr. 30, 2012), available at https://www.nih.gov/news-events/news-releases/avastin-lucentis-
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`are-equivalent-treating-age-related-macular-degeneration. When used in this manner off-label,
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`Avastin costs approximately $55 per dose, while Lucentis costs approximately $2,000 per dose
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`and Eylea $1,850 per dose. Nonetheless, because co-pay foundation coverage is readily
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`available for Eylea and Lucentis but not for Avastin, Eylea and Lucentis are actually cheaper
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`than Avastin for patients facing Medicare co-pays. On the other hand, when physicians knew
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`that co-pay coverage was not available for Eylea or Lucentis, they often prescribed Avastin, so
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`as not to impose large Medicare co-pays on their patients or risk being unable to collect those co-
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`pays.
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`31.
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`Although it was not Regeneron’s first commercial product, Regeneron’s launch of
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`Eylea ushered in Regeneron’s transition to a commercially-focused entity and its creation of a
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`commercial organization. Eylea is now the top-selling drug in the United States for AMD.
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`Background on CDF
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`32. Michael Banigan founded CDF in 2004. In 2006, CDF began soliciting and
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`receiving money from pharmaceutical companies and then using that money to cover co-pays for
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`those companies’ drugs.
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`33.
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`Since at least 2010, CDF has operated a fund that covers Medicare co-pays for
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`patients taking drugs for AMD. Prior to FDA’s approval of Eylea, Genentech’s Lucentis was the
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`only FDA-approved therapy for AMD, and Genentech alone financed CDF’s AMD fund. Once
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`FDA approved Eylea in 2011, CDF’s fund issued grants for both Lucentis and Eylea, but not
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`Avastin.1
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`34.
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`35.
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`CDF now operates as Good Days.
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`If CDF has approved a grant for an Eylea patient, the patient’s physician may
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`submit a claim to CDF for the applicable Medicare deductible or co-pay amount each time the
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`physician administers Eylea to that patient, and CDF then will pay that amount directly to the
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`physician. See Good Days EPay Billing Guide, available at
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`https://www.mygooddays.org/epay/EPay_Billing%20Guide.pdf.
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`The Evolution of Regeneron’s Funding of CDF
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`2011-12
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`36.
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`Prior to the launch of Eylea, Regeneron’s commercial team understood that the
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`price of the drug would make the drug unaffordable for many people suffering from wet AMD,
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`including Medicare beneficiaries, and that, as a result, the price could cause physicians not to
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`prescribe the drug. Accordingly, Regeneron commissioned Xcenda, a division of
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` CDF also operated a small fund for patients taking drugs for retinal vein occlusion (“RVO”),
`for which physicians also prescribe Eylea and Lucentis.
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`AmerisourceBergen Corporation, to analyze various matters concerning the pricing and
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`reimbursement for Eylea including, among other things, how to price Eylea, how to structure the
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`free drug program for Eylea, and how much money Regeneron should anticipate spending on
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`foundation support for Eylea. In coming up with an estimate of how much Regeneron should
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`budget for co-pay foundation funding, Xcenda began by observing that 77 percent of wet AMD
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`patients were Medicare beneficiaries. Xcenda then estimated the proportion of those Medicare
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`beneficiaries who would seek foundation coverage for their co-pays, estimated the amount of
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`foundation funding each beneficiary would receive, and applied those estimates to Regeneron’s
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`Eylea sales projections. Using that methodology, Xcenda projected that Regeneron should spend
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`just under $3 million on foundation support in 2012. (A copy of the slide presentation with
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`Xcenda’s findings is attached as Exhibit 1. Xcenda used the term “ICCF” to refer to co-pay
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`foundations.)
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`37.
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`At the time of Xcenda’s analysis, Regeneron was considering a price of $1,500
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`per Eylea injection. In its analysis, Xcenda noted that Regeneron could increase that price to
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`$1,950 per injection, but that the higher price would necessitate Regeneron increasing its
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`foundation funding by 43%. Notwithstanding the increased cost of foundation funding with the
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`higher price, Xcenda advised that “[t]he overall financial impact considering revenue of
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`increasing price to $1,950/injection is largely favorable to Regeneron, since the revenue increase
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`will offset the increase in the budget needs to run the program.” An image of this slide is below:
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`As noted above, Regeneron ultimately settled on a price of $1,850 per Eylea injection, or 23
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`percent higher than the price the company earlier had considered.
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`38.
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`Xcenda’s analysis further noted that Regeneron could provide free Eylea to
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`Medicare patients who could not afford it, but Xcenda recommended that Regeneron instead
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`refer those patients to a co-pay foundation. Xcenda explained that patients who received free
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`Eylea would not generate revenue for Regeneron, whereas Eylea patients who received Medicare
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`co-pay coverage from a foundation would generate revenue for Regeneron from the resulting
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`Medicare claims. Regeneron followed this advice, too, and offered free Eylea only to patients
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`without insurance coverage for Eylea; the company barred Medicare patients from its free drug
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`program even if they could not afford the co-pays for Eylea.
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`39.
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`Regeneron management understood from the outset that, absent the availability of
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`Medicare co-pay coverage for Eylea, physicians would prescribe and purchase Avastin rather
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`than Eylea. Thus, Cynthia Sherman, a Senior Director for Reimbursement at Regneron testified
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`as follows:
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`Q:
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`A:
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`40.
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`But people understood that if co-pay assistance was not available for
`Eylea or Lucentis patients, that patients with wet AMD would end up on
`Avastin?
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`Yeah, that’s why they wanted to have a managed care co-pay program.
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`Notwithstanding Xcenda’s projection that Regeneron should spend nearly $3
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`million on foundation support in 2012, Regeneron’s management was initially skeptical of how
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`payments to foundations could generate revenue for Regeneron. Moreover, Regeneron’s
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`management knew that CDF paid Lucentis patients’ co-pays in addition to Eylea patients’ co-
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`pays. Without more information from CDF, Regeneron could not determine whether its
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`payments to CDF would cover Eylea co-pays or Lucentis co-pays. Accordingly, until CDF
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`provided more information about the projected aggregate co-pays for Eylea, Regeneron paid
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`CDF far less than what Xcenda recommended.
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`41.
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`Specifically, Regeneron only paid CDF $125,000 at the end of 2011 (FDA did not
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`approve Eylea for treatment of wet AMD until November 28, 2011) and $600,000 in 2012. In
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`testimony, Sherman explained that Regeneron senior management did “not provide a lot of
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`money the first year because you just didn’t know how many -- what the uptake of Eylea would
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`be, and Regeneron did not want to pay for Lucentis’s co-pay.”
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`42.
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`As it happened, Eylea’s sales performance in 2012 greatly exceeded Regeneron’s
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`pre-launch expectations. This caused Regeneron to consider paying CDF more, but Regeneron
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`was not willing to do so absent proof that CDF needed the money to fund Eylea co-pays (and not
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 14 of 36
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`Lucentis co-pays).
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`43.
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`On July 9, 2012, Robert Krukowski, Regeneron’s Senior Manager for
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`Reimbursement & Managed Markets Marketing, sent an e-mail to his direct report, William
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`Daniels, asking if Daniels had spoken to Clorinda Walley, CDF’s Executive Director, about
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`“upping our contributions for 2013.” Krukowski added that “[w]e probably should up our
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`overall contribution to CDF given our [i.e., Eylea’s] performance but it is going to be hard to just
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`pick a number.” (A copy of this e-mail is attached as Exhibit 2.)
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`44.
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`On July 23, 2012, Daniels sent an e-mail to Walley advising that he had a meeting
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`scheduled “to review our budget planning for 2013,” and that he was “going to need to justify my
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`request for our 2013 donation.” Accordingly, Daniels asked if he and Walley could “meet prior
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`to then to review the numbers.” (A copy of this e-mail is attached as Exhibit 3.)
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`45.
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`In a response the next day, Walley provided Daniels with a spreadsheet entitled
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`“Regeneron Projections 2013.” Daniels understood that the spreadsheet showed how many
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`Eylea patients were in the fund, how many Eylea patients CDF projected to be in the fund in
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`2013, and how much money CDF would need to cover co-pays for those patients. The
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`spreadsheet stated that CDF’s “Total Projected Funding Needed” from Regeneron was just over
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`$40 million. Daniels promptly forwarded Walley’s e-mail to his boss, Krukowski, with a cover
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`e-mail stating: “See projections for next year. She is stating that her 2013 projection is pretty
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`much our 2012 actuals.” (A copy of this e-mail chain, including Walley’s spreadsheet, is
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`attached as Exhibit 4.)
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`46.
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`On August 8, 2012, Daniels sent Krukowski an e-mail in preparation for a budget
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`meeting with Terifay, who was then Regeneron’s Vice President, Commercial, and later became
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`the company’s Executive Vice President, Commercial. At the time, Daniels believed that
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 15 of 36
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`Regeneron senior management was unlikely to approve a $40 million budget for CDF in 2013.
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`In his e-mail, Daniels tried to use Eylea’s market share to come up with a lower estimate of the
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`amount CDF would need to cover Eylea patients’ Medicare expenses in 2013. Whereas Walley
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`had projected that CDF would need about $17 million just to cover “rollover patients” [i.e.,
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`renewals of grants that CDF had given Eylea patients in 2012], Daniels’ market share approach
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`yielded an estimate of about $5.6 million for those patients. Daniels further projected that the
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`“ROI” to Regeneron from funding these patients would be nearly $25 million, or a return of
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`more than 4 to 1. On August 14, 2012, Daniels replied to his own August 8 e-mail with
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`estimates of the amounts Regeneron would have to pay CDF to cover new Eylea patients in
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`2013. His estimates for those patients ranged from about $11.5 million to over $19 million. (A
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`copy of this e-mail chain is attached as Exhibit 5.)
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`47.
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`Later on August 14, 2012, Krukowski sent out an invitation for a meeting on
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`August 20, 2012, to discuss “Foundation Funding considerations.” The invitees included
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`Terifay, Daniels, and Stephen Dressel, a Regeneron financial analyst. In the invitation,
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`Krukowski explained what “we would like to bring you up to speed on our current activity
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`through CDF this year and gain consensus on our foundation funding strategy (ROI, risks,
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`considerations) for 2013.” (A copy of this invitation is attached as Exhibit 6.)
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`48.
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`On August 16, 2012, in anticipation of a pre-meeting that day to discuss “CDF
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`Funding,” Daniels circulated a comparison of his and Walley’s projections. Daniels included a
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`projection of millions of dollars of “Potential Lost Sales” if Regeneron did not pay CDF enough
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`to cover the Medicare expenses of potential new Eylea patients who would seek funding from
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`CDF in 2013. The recipients of Daniels’ e-mail included Krukowski and Robert Davis, who
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`reported directly to Terifay and was Regeneron’s Executive Director and Head of Trade,
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 16 of 36
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`Reimbursement & Managed Markets. (A copy of this e-mail is attached as Exhibit 7.)
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`49.
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`The meeting scheduled with Terifay for August 20, 2012, was rescheduled for
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`October 8, 2012.
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`50.
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`On August 27, 2012, Daniels sent Krukowski and Cathy Casey, Regeneron’s
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`Senior Director for Reimbursement Strategy, a slide presentation entitled “CDF 2013.”
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`According to Daniels, an objective of the presentation was to “Ensure Sr. Management is aware
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`of the CDF funding strategy and implications to the EYLEA franchise if CDF’s funding for
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`AMD/RVO were to run out in 2013.” Daniels noted that “CDF management has communicated
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`that for 2013, if every donor doesn’t cover their market share the fund will be closed.” He
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`further reported the following:
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`(A copy of this presentation is attached as Exhibit 8.)
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`51.
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`On October 4, 2012, in anticipation of the upcoming meeting with Terifay,
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`Daniels sent an updated version of his presentation slides to Dressel, the financial analyst. (A
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 17 of 36
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`copy of this presentation is attached as Exhibit 9.)
`
`52.
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`At the meeting on October 8, 2012, Terifay rejected Daniels’ suggestion and
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`indicated that, subject to further discussions with Goldberg, the CFO, Regeneron would pay CDF
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`just $2.5 million in 2013. Daniels subsequently conveyed to Walley that Regeneron would pay
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`CDF $2.5 million in January 2013.
`
`53.
`
`On December 19, 2012, Walley sent Daniels an e-mail warning that a payment of
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`only $2.5 million would not enable CDF’s AMD fund to remain open past early 2013. With her
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`e-mail, Walley attached a revised projection showing that the AMD fund would need just under
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`$25 million to cover co-pays for Eylea patients in 2013. (A copy of this e-mail is attached as
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`Exhibit 10.)
`
`54.
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`Later on December 19, 2012, Krukowski sent an e-mail to his colleague, Casey,
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`about CDF funding. In his e-mail, Krukowski observed that CDF was “processing re-
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`enrollments for next year and we have 6800 patients being re-enrolled.” Krukowski added:
`
`They [CDF] have provided us more information on Gene[ntech] funding and we
`really need to make everyone aware of the risks and what is our true commitment.
`Apparently Steve [Dressel] and Bob T[erifay] agreed to fund CDF for $10 Mil
`next year but thought it would be better to hid[e] it from us. I feel confident that
`we still have an issue at $10 mil based up[on] what CDF is stating and has shared
`with us.
`
`
`(A copy of this e-mail is attached as Exhibit 11.)
`
`
`2013
`
`
`
`55.
`
`On January 3, 2013, Daniels and Krukowski met with Terifay, Davis, and Dressel
`
`to discuss CDF. The meeting invitation noted that Daniels “has had a follow [on conversation
`
`with] CDF and new information to discuss regarding the other Donor[’]s commitments and our
`
`current roll over patients.” (A copy of this meeting invitation is attached as Exhibit 12.) After
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`the meeting, Krukowski sent Casey and Davis an e-mail reiterating that “the additional $2.5 mil
`17
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`Case 1:20-cv-11217-LTS Document 1 Filed 06/24/20 Page 18 of 36
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`we were planning on funding in Q1 was not enough based up[on] the current number of EYLEA
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`patients CDF has already rolled over and enrolled for 2013.” Krukowski noted that Daniels “did
`
`an excellent job presenting the attached analysis [Daniels’ comparison of Walley’s original
`
`Regeneron projection and his own] on why we need to up our funding in Q1 significantly and
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`made Bob T[erifay] aware that we potentially need ~$25Mil to adequately fund our patient
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`responsibility for 2013.” Krukowski added that Terifay “wanted to keep a copy of this to review
`
`with ‘the boys’, I am assuming Len [Schleifer] and Murray [Goldberg] to see if we can get
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`$10mil to fund for Q1.” (A copy of this e-mail is attached as Exhibit 13.)
`
`56.
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`The next day, Christopher Fenimore, Regeneron’s Vice President of Financial
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`Planning, sent two e-mails to Dressel a