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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 1 of 42
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`HORIZON HEALTHCARE SERVICES, INC.
`D/B/A HORIZON BLUE CROSS BLUE
`SHIELD OF NEW JERSEY,
`
` Plaintiff,
`
`v.
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
`
`
`
`
` Case No. ________________
`
` COMPLAINT
`
` DEMAND FOR JURY TRIAL
`
`REGENERON PHARMACEUTICALS, INC.,
`
` Defendant.
`
`
`
`
`
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`Plaintiff Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New
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`Jersey (“Horizon”) alleges the following against Defendant Regeneron Pharmaceuticals, Inc.:
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`Parties
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`1.
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`Plaintiff Horizon, New Jersey’s oldest and largest health insurer, is a tax-paying,
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`not-for-profit health service corporation, providing a wide array of medical, dental, vision and
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`prescription insurance products and services for its 3.4 million members. Horizon is authorized and
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`established under the New Jersey Health Services Corporations Act, N.J.S.A. 17:48E-1, et seq.,
`with its principal place of business at Three Penn Plaza East, Newark, New Jersey 07105.
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`2.
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`Horizon provides, among other things, (a) Medicare benefits through contracts with
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`the Centers for Medicare and Medicaid Services (“CMS”) for Medicare beneficiaries through
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`various Medicare Advantage plans offered under Medicare Part C, and prescription drug benefits
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`under Medicare Part D; and (b) private commercial health plan benefits that cover medical expenses
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`and prescription drug costs incurred by plan beneficiaries on an individual or group basis.
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`3.
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`Horizon, either directly or through its health insurance plan subsidiaries, insures and
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`administers health insurance benefits for its members and group customers, including self-funded
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 2 of 42
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`group customers that contract with Horizon and its health insurance plan subsidiaries to, among
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`other things, administer the processing of claims on their behalf and to pursue recoveries related to
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`those claims.
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`4.
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`Regeneron Pharmaceuticals, Inc. (“Regeneron”) is a New York corporation with its
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`principal place of business at 777 Old Saw Mill River Road, Tarrytown, New York 10591.
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`Regeneron is a publicly traded pharmaceutical company with a market capitalization of more than
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`$75 billion (as of March 31, 2022).
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`Summary
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`5.
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`Regeneron manufactures and sells Eylea (aflibercept), a prescription drug
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`administered by injection for the treatment of wet age-related macular degeneration (“wet AMD”),
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`an eye disease that can render patients legally blind. Since 2012, Eylea’s wholesale list price has
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`been $1,850 per treatment.
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`6.
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`Although a competing and equally effective drug, Avastin, cost only about $55 per
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`treatment during the same period, Eylea’s sales have far exceeded the sales of Avastin or any other
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`alternative drug. Regeneron has reaped billions of dollars in annual revenue from Eylea’s sales.
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`7.
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` Since 2012, Regeneron has built Eylea’s market dominance and maintained its
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`exorbitant price through an illegal scheme that directly injured Horizon and other health insurance
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`plans. On a regular basis, Regeneron transferred funds to a so-called “charity,” the Chronic Disease
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`Fund, Inc. (“CDF”), to provide financial assistance to patients for their out-of-pocket share of
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`Eylea’s costs. Pursuant to a secret arrangement between Regeneron and CDF, the funds provided
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`by Regeneron were calculated to cover patients’ out-of-pocket costs for Eylea but not for competing
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`drugs. Regeneron’s arrangement with CDF made Eylea cheaper for patients—but not for the
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`Medicare program or for private healthcare plans—in comparison with alternative drugs.
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`8.
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` As a result, Regeneron gained an unfair advantage over its competitors by
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 3 of 42
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`distorting the cost of Eylea in the view of patients and their prescribers, while increasing the costs
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`borne by Medicare and private healthcare plans. The payments funneled by Regeneron through
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`CDF operated as kickbacks to patients who otherwise had a contractual incentive to choose an
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`equally effective but lower-cost drug. Regeneron’s scheme thus violated the federal Anti-Kickback
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`statute, among other laws.
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`9.
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` Regeneron concealed its illegal scheme from the public, including Horizon and
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`other health insurance plans, until the scheme was exposed by an action against Regeneron filed by
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`the U.S. Department of Justice in June 2020 (the “DOJ Action”). United States v. Regeneron
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`Pharms, Inc., No. 20-CV-11217-FDS (D. Mass.).
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`10.
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`As described in further detail below, evidence revealed by the DOJ Action
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`demonstrates not only Regeneron’s extensive coordination with CDF, but also Regeneron
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`executives’ awareness that this coordination violated federal law, and that wet AMD patients and
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`prescribers would opt for Avastin in the absence of Regeneron’s kickback funding.
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`11.
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` To date, Horizon has paid more than $180 million to cover patients’ costs with
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`respect to Eylea, including nearly $1 million in Massachusetts. Regeneron’s illegal scheme
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`targeted claims for Eylea paid by Horizon and other health insurance plans.
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`12.
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` Because Horizon was directly injured by Regeneron’s scheme, Horizon brings
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`this action under the federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act, state
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`consumer protection statutes, and state law governing fraudulent concealment, tortious interference
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`with contractual relationships, and unjust enrichment.
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`Background
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`13.
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`The U.S. Food and Drug Administration approved Eylea as a treatment for wet
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`AMD in 2011. Soon thereafter, Regeneron developed a covert pricing strategy for Eylea: by
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`paying patients’ out-of-pocket costs through a supposedly independent “charity,” Regeneron could
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 4 of 42
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`neutralize the incentive systems used by Medicare and private healthcare plans to guide covered
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`patients to lower-cost but equally effective drugs.
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`14.
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`By reducing or even eliminating patients’ and prescribers’ cost-sensitivity,
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`Regeneron’s scheme increased market demand for Eylea over less expensive alternative drugs,
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`maintained Eylea’s exorbitant price, and shifted a higher percentage of Eylea’s net cost to health
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`insurance plans, including Horizon. Pursuant to this scheme, Regeneron gained far more in sales
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`revenue than it paid to the supposed “charity.”
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`15.
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`Regeneron implemented its scheme in close coordination with CDF. On a regular
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`basis, Regeneron and CDF discussed the amount of funds needed to cover the anticipated cost-
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`sharing obligations of patients using Eylea. Regeneron then transferred the necessary funds to CDF
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`with the understanding and agreement that the funds would be used solely for the benefit of Eylea
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`patients, as opposed to patients using alternative drugs.
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`16.
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`Regeneron’s scheme rendered Eylea cost-free in the view of patients and their
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`prescribing physicians, while healthcare plans paid Eylea’s entire net cost. In effect, Regeneron’s
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`scheme covertly funneled illegal kickbacks to patients through CDF, giving patients and their
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`prescribers a powerful financial incentive to choose Eylea over alternative drugs. When choosing
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`among alternative drugs, patients naturally prefer drugs that are cheaper or even cost-free.
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`Similarly, prescribers naturally favor alternative drugs that their patients can more easily afford.
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`17.
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`Regeneron widely advertised to patients and physicians the availability of CDF’s
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`financial assistance for Eylea’s out-of-pocket costs. Regeneron did so through a program called
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`“EYLEA4U,” which Regeneron implemented in concert with CDF and The Lash Group LLC (the
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`“Lash Group”), a pharmaceutical industry consulting firm. The EYLEA4U program connected
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`patients and prescribers with CDF, assisted them in submitting claims to health insurance plans
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`such as Horizon, and facilitated the plans’ payment of claims tainted by Regeneron’s illegal
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 5 of 42
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`kickbacks.
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`18.
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`Regeneron, CDF, and the Lash Group never disclosed to Horizon and other health
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`insurance plans, or to the public at large, the illegal aspects of Regeneron’s relationship with CDF.
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`In particular, they concealed the fact that Regeneron’s funding of CDF was designed to cover
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`anticipated demand by Eylea patients exclusively. Moreover, as recently disclosed in the DOJ
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`Action, Regeneron executives concealed from the company’s own auditors the nature of
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`Regeneron’s relationship with CDF.
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`19.
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`Regeneron’s scheme was remarkably successful. Despite its exorbitant cost, Eylea
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`quickly became the best-selling treatment for wet AMD in the United States, far outstripping any
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`competing product. In 2020 alone, Eylea generated almost $5 billion in sales revenue for
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`Regeneron.1 Eylea is by far Regeneron’s best-selling product.
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`20.
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`Medicare programs have spent over $17 billion to cover the cost of Eylea from 2013
`
`through 2020. CMS Drug Spending, https://www.cms.gov/Research-Statistics-Data-and-
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`Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs. Medicare Part B spent
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`more for Eylea than any other drug in 2019. Medicare Part B Drug Spending Dashboard,
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`https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-
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`Reports/Information-on-Prescription-Drugs/MedicarePartB. CMS, the agency that administers
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`Medicare, recently singled out Eylea as illustrating the nation’s drug-pricing problems, stating:
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`“[T]he top-selling Medicare Part B drug—a common eye drug (Eylea) —was approximately two
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`times as expensive in Medicare Part B as in comparison countries.” The government thus cited
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`Eylea as a prime example of the need to reform a dysfunctional and “anti-competitive” system that
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`“leaves taxpayers and American seniors on the hook for paying the highest drug costs in the world.”
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`
`1
`In addition, Eylea is sold by Bayer outside the U.S. and generated approximately $3 billion in foreign
`2020 sales.
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 6 of 42
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`Centers for Medicare & Medicaid Services, FACT SHEET: Most Favored Nation Model for
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`Medicare Part B Drugs and Biologicals Interim Final Rule with Comment Period (Nov. 20, 2020),
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`https://www.cms.gov/newsroom/fact-sheets/fact-sheet-most-favored-nation-model-medicare-part-b-
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`drugs-and-biologicals-interim-final-rule#_ftn5.
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`21.
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`Horizon pays for Eylea both as a Medicare Part C (or Medicare Advantage) Plan
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`sponsor and as a provider of private commercial health insurance plans.
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`22.
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`Horizon has paid more than $180 million, including nearly $1 million in
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`Massachusetts, to date to cover the cost of Eylea for its members. As alleged below, Regeneron’s
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`scheme violated the federal RICO statute and state consumer protection statutes. In addition,
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`Regeneron’s scheme defrauded Horizon, tortiously interfered with the contractual relationships
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`between Horizon and its members, and unjustly enriched Regeneron at the direct expense of
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`Horizon.
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`23.
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`Under the relevant contracts, Horizon plan members were obligated to bear some of
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`the cost of their prescription drugs through co-payments, co-insurance, or deductibles. By
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`funneling kickbacks to patients to cover the cost of their choosing Eylea over other drugs,
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`Regeneron caused Horizon to pay for Eylea even though the patients had not met their contractual
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`cost-sharing obligations. In doing so, Regeneron improperly eliminated members’ contractual
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`incentive to use lower-cost alternatives.
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`24.
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`In the absence of this conduct by Regeneron and its co-conspirators, Horizon
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`members in need of wet AMD treatment would have opted for the far cheaper Avastin. Regeneron’s
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`unlawful kickback scheme thus caused Horizon to make payments for Eylea that it would not
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`otherwise have made.
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`25.
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`The contractual provisions that create this incentive are an essential element of
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`Horizon’s insurance plans. The provisions encourage patients and prescribers to make cost
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 7 of 42
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`comparisons when choosing among alternative drugs. The provisions thus promote price
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`competition in the prescription drug market.
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`26.
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`By nullifying the cost-comparison incentive for its own private benefit, Regeneron’s
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`scheme suppressed price competition, harmed private healthcare plans and the Medicare program,
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`and diverted billions of dollars from the nation’s taxpayers. According to one study, if patients
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`used Avastin, which is as safe and effective as Eylea at a fraction of Eylea’s cost, Medicare and
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`U.S. taxpayers would save $18 billion over ten years. See D. Hutton, P. Newman-Casey, M. Tavag,
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`D. Zacks, & J. Stein, Switching to Less Expensive Blindness Drug Could Save Medicare Part B $18
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`Billion Over a Ten-Year Period, Health Affairs Vol. 33, No. 6 (2014),
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`https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2013.0832.
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`Jurisdiction and Venue
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`27.
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` This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§
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`1331 and 1367. Horizon asserts claims under the federal RICO Act, and Horizon’s state law claims
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`are so related to those federal claims that they form part of the same case or controversy.
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`28.
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`In addition, this Court has subject matter jurisdiction over this action pursuant to 28
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`U.S.C. § 1332 because there is complete diversity of citizenship between Horizon and Regeneron,
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`and the amount in controversy exceeds $75,000.
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`29.
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`This Court has personal jurisdiction over Regeneron. At all relevant times,
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`Regeneron transacted business in Massachusetts; marketed and sold Eylea in Massachusetts to
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`customers located in Massachusetts; and made payments to cover the cost-sharing obligations of
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`Eylea patients located in Massachusetts, including patients covered by Horizon plans.
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`30.
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`Venue is proper in this District under 28 U.S.C. § 1391 because a substantial part of
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`the events giving rise to the claims in this action have occurred in this District. Regeneron paid for
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`the cost-sharing obligations of a substantial number of patients located in Massachusetts.
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`7
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 8 of 42
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`“Wet” Age-Related Macular Degeneration
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`31.
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`Eylea is prescribed to treat neovascular or “wet” age-related macular degeneration
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`(“wet AMD”), a major cause of progressive vision loss, especially in patients older than 50.
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`32. Wet AMD is most commonly treated by “anti-VEGF” drug injections that can slow
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`down, but cannot cure, the condition. VEGF, or vascular endothelial growth factor, is a protein that
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`promotes the growth of new blood vessels. When produced in the eye, VEGF interferes with vision
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`by stimulating the abnormal growth of blood vessels beneath the retina. Anti-VEGF drugs inhibit
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`this growth through a continuing course of regular injections.
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`Eylea and Competing Drugs
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`33.
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`Eylea is one of several anti-VEGF drugs on the market. Although it is not superior
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`to other drugs, it is extremely expensive. Since 2012, Eylea’s wholesale acquisition cost has been
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`set at $1,850 per dose. The recommended use of Eylea requires an injection every four weeks for
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`the first five doses, followed by further injections every eight weeks for the rest of the patient’s life.
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`Accordingly, Eylea has a cost of approximately $15,000 during the first year of treatment and more
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`than $11,000 every year thereafter.
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`34.
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`Eylea’s primary competitors are Lucentis and Avastin, both manufactured by
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`Genentech, Inc. Lucentis has been approved by the FDA to treat wet AMD and is priced
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`comparably to Eylea at $2,000 per dose. Although Genentech’s other drug, Avastin, is chemically
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`similar to Lucentis, its FDA approval is currently limited to treating certain types of cancer.
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`Nevertheless, clinical studies show that its effectiveness in treating wet AMD is similar to that of
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`both Eylea and Lucentis. See National Eye Institute, Avastin as Effective as Eylea for Treating
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`Central Retinal Vein Occlusion (May 9, 2017), https://www.nei.nih.gov/about/news-and-
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`events/news/avastin-effective-eylea-treating-central-retinal-vein-occlusion.
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`35.
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`Avastin is widely available for off-label use as a treatment for wet AMD at about
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 9 of 42
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`$55 per dose, or approximately 3% of Eylea’s cost.
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`36.
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`Doctors have shown a willingness to choose Avastin over Eylea when financial
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`incentives become a significant consideration. For example, a Regeneron executive testified in
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`December 2020 that a decrease in the Medicare reimbursement rate for Eylea gave doctors a strong
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`incentive “to switch patients from EYLEA to off-label Avastin.” He also testified that “at least
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`some patients who were switched from EYLEA to off-label Avastin (or other drugs) would be
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`unlikely to return to EYLEA.” Regeneron Pharms., Inc. v. U.S. Dep’t of Health & Human Servs.,
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`No. 7:20-cv-10488-KMK, ECF No. 13 ¶¶ 24, 26 (S.D.N.Y. Dec. 11, 2020).
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`Medicare’s Cost-Sharing Provisions
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`37.
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`The federal government administers Medicare Parts A and B directly through CMS.
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`Part A covers in-patient hospital and skilled nursing services as well as certain types of home-based
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`care. Part B covers other medical services, including physician, diagnostic, and out-patient hospital
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`services. Both Parts A and B include related drug coverage in certain circumstances.
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`38. Medicare patients may also be eligible to enroll in Medicare Part C, known as
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`“Medicare Advantage.” Medicare Advantage plans combine the benefits of Parts A and B and
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`often include additional prescription drug coverage. Private healthcare plans provide Medicare
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`Advantage benefits under contracts with CMS.
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`39. Medicare Part D subsidizes the cost of prescription drugs for eligible Medicare
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`beneficiaries. Under this program, private healthcare plans, known as “Part D sponsors,” enter into
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`contracts with CMS to deliver prescription drug benefits to Medicare beneficiaries in exchange for
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`a fixed per-patient fee.
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`40.
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`Horizon provides Medicare Advantage plans as separate offerings or as combined
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`packages that include Parts C and D. The entities involved may be a health maintenance
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`organization (HMO) or a preferred provider organization (PPO), both of which provide incentives
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 10 of 42
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`that encourage patients to make financially prudent and efficient medical choices.
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`41.
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`Under Medicare Advantage contracts, the government pays the private healthcare
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`plan a specified monthly amount per patient. The healthcare plan is responsible for managing those
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`funds to ensure their efficient use.
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`42. Medicare patients generally must pay some out-of-pocket costs. Under Medicare
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`Advantage plans, a patient’s cost-sharing obligations may take the form of premiums, deductibles,
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`co-payments, or co-insurance. Medicare Advantage plans vary with respect to how these
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`provisions are combined and structured, but in all cases provide a cap on the patient’s annual out-
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`of-pocket costs, whereas other Medicare programs do not provide a cap.
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`43. Medicare Advantage plans cover Eylea and similar drugs, which are administered by
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`a physician at the physician’s office.
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`44.
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`Claims payable by Medicare must comply with federal law, including the Anti-
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`Kickback statute, 42 U.S.C. § 1320a-7b(b). Healthcare providers must expressly certify such
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`compliance. Providers use a standard form, CMS 1500, to submit claims to Horizon and other
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`payers. The form requires providers to certify that each claim “complies with all applicable
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`Medicare and/or Medicaid laws, regulations, and program instructions for payment including but
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`not limited to the Federal anti-kickback statute . . . .” CMS-1500,
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`https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-
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`Listing-Items/CMS-1500.
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`45.
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`Horizon’s Medicare Advantage plans, like its private commercial plans, generally
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`include cost provisions, which require that the patient pay a percentage of the cost of drugs such as
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`Eylea, subject to an annual cap. Such cost-sharing provisions are a crucial factor in managing
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`healthcare costs. When patients continue to bear some responsibility for out-of-pocket costs, they
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`and their prescribers have an incentive to consider alternatives to more expensive drugs. When
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 11 of 42
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`patients and their prescribers lack any stake in the cost of drugs, pharmaceutical manufacturers are
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`free to raise the price of their drugs without constraint from consumers. This fundamentally distorts
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`the market and eliminates price competition among manufacturers.
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`
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`“Patient Assistance Programs” and the Anti-Kickback Statute
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`46.
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`Drug companies have sought to neutralize cost-sharing provisions, and thereby
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`increase their sales revenue, by paying patients’ out-of-pocket costs. Federal law prohibits such
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`attempts under the circumstances presented here.
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`47.
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`The federal Anti-Kickback statute prohibits “knowingly and willfully offer[ing] or
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`pay[ing] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly
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`or covertly, in cash or in kind to any person to induce such person . . . to purchase, lease, order, or
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`arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for
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`which payment may be made in whole or in part under a Federal health care program,” including
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`Medicare. 42 U.S.C. § 1320a-7b(b)(2).
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`48.
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`In addition, the statute prohibits (1) “knowingly and willfully mak[ing] or caus[ing]
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`to be made any false statement or representation of a material fact in any application for any benefit
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`or payment under a Federal health care program,” or (2) “knowingly and willfully mak[ing] or
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`caus[ing] to be made any false statement or representation of a material fact for use in determining
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`rights to such benefit or payment.” 42 U.S.C. § 1320a–7b(a)(1) and (2).
`
`49.
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`In 2005, the U.S. Department of Health and Human Services, Office of Inspector
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`General (“OIG”) issued a “Special Advisory Bulletin on Patient Assistance Programs for Medicare
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`Part D.” The Bulletin addressed patient assistance programs (“PAPs”) that help patients pay their
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`out-of-pocket healthcare costs. The Bulletin warned that PAPs funded by drug companies “present
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`heightened risks under the anti-kickback statute.” 70 Fed. Reg. 70,623, 70,624 (Nov. 22, 2005).
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`50.
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`The Bulletin noted that “cost-sharing subsidies provided by bona fide, independent
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 12 of 42
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`charities unaffiliated with pharmaceutical manufacturers should not raise anti-kickback concerns,
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`even if the charities receive manufacturer contributions.” Id. But it went on to point out that drug
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`companies may improperly use charities in ways that violate the Anti-Kickback statute and achieve
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`anti-competitive effects:
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`Subsidies provided by traditional pharmaceutical manufacturer PAPs have the
`practical effect of locking beneficiaries into the manufacturer’s product, even if
`there are other equally effective, less costly alternatives (and even if the patient’s
`physician would otherwise prescribe one of these alternatives). Subsidizing
`Medicare Part D cost-sharing amounts will have this same steering effect.
`Moreover, as we have previously noted in the Part B context, cost-sharing
`subsidies can be very profitable for manufacturers, providing additional incentives
`for abuse. So long as the manufacturer’s sales price for the product exceeds its
`marginal variable costs plus the amount of the cost-sharing assistance, the
`manufacturer makes a profit. These profits can be considerable, especially for
`expensive drugs for chronic conditions. We are concerned that pharmaceutical
`manufacturers may seek improperly to maximize these profits by creating sham
`“independent” charities to operate PAPs; by colluding with independent charity
`programs to ensure that the manufacturer’s contributions only or primarily
`benefit patients using its products (discussed in more detail below); or by
`manipulating financial need or other eligibility criteria to maximize the number of
`beneficiaries qualifying for cost-sharing subsidies.
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`Id. at 70,626 (emphasis added).
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`51.
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`The Bulletin also stated:
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`[A] core question is whether the anti-kickback statute would be implicated if a
`manufacturer of a drug covered under Part D were to subsidize cost-sharing
`amounts (directly or indirectly through a PAP) incurred by Part D beneficiaries
`for the manufacturer’s product. Consistent with our prior guidance addressing
`manufacturer cost-sharing subsidies in the context of Part B drugs, we believe
`such subsidies for Part D drugs would implicate the anti-kickback statute and pose
`a substantial risk of program and patient fraud and abuse. Simply put, the
`subsidies would be squarely prohibited by the statute, because the manufacturer
`would be giving something of value (i.e., the subsidy) to beneficiaries to use its
`product. Where a manufacturer PAP offers subsidies tied to the use of the
`manufacturer’s products (often expensive drugs used by patients with chronic
`illnesses), the subsidies present all of the usual risks of fraud and abuse
`associated with kickbacks, including steering beneficiaries to particular drugs;
`increasing costs to Medicare; providing a financial advantage over competing
`drugs; and reducing beneficiaries[’] incentives to locate and use less expensive,
`equally effective drugs.
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`12
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 13 of 42
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`Id. at 70,625 (emphasis added, footnotes omitted).
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`52.
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`The Bulletin also expressed concern about “the use of cost-sharing subsidies to
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`shield beneficiaries from the economic effects of drug pricing, thus eliminating a market safeguard
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`against inflated prices.” Id. at 70,626.
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`53.
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`Finally, the Bulletin stated that a drug company’s funding of “an independent, bona
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`fide charity that provides cost-sharing subsidies” would likely comply with federal law if the
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`following criteria were met:
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`(a) neither the drug company itself nor any affiliate “exerts any direct or
`indirect influence or control over the charity or the subsidy program”;
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`(b) the “charity awards assistance in a truly independent manner that
`severs any link” between the drug company’s funding and the beneficiary (“i.e.,
`the assistance provided to the beneficiary cannot be attributed to the donating
`pharmaceutical manufacturer”);
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`(c) the “charity awards assistance without regard to the pharmaceutical
`manufacturer’s interests and without regard to the beneficiary’s choice of product,
`provider, practitioner, supplier, or Part D drug plan”;
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`(d) the “charity provides assistance based upon a reasonable, verifiable,
`and uniform measure of financial need that is applied in a consistent manner”;
`and 
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`(e) the “pharmaceutical manufacturer does not solicit or receive data
`from the charity that would facilitate the manufacturer in correlating the amount
`or frequency of its donations with the number of subsidized prescriptions for its
`products.”
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`Id. (footnotes omitted).
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`54.
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`The Bulletin concluded: “Simply put, the independent charity PAP must not
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`function as a conduit for payments by the pharmaceutical manufacturer to patients and must not
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`impermissibly influence beneficiaries’ drug choices.” Id. at 70,627 (footnote omitted).
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`55.
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`In 2014, OIG issued a “Supplemental Special Advisory Bulletin: Independent
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`Charity Patient Assistance Programs,” which reiterated concerns stated in its 2005 Bulletin. 79
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 14 of 42
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`Fed. Reg. 31,121 (May 30, 2014). In particular, the Supplemental Bulletin pointed to the following
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`conditions as a “critical safeguard”:
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`[The charity] will provide donors only with reports including data such as the
`aggregate number of applicants for assistance, the aggregate number of patients
`qualifying for assistance, and the aggregate amount disbursed from the fund
`during that reporting period. Thus, the charity would not give a donor any
`information that would enable a donor to correlate the amount or frequency of
`its donations with the number of aid recipients who use its products or services
`or the volume of those products supported by the PAP.
`
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`Id. at 31,123 (emphasis added).
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`Regeneron’s Violations of the Anti-Kickback Statute
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`56.
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`Beginning in 2013, Regeneron covertly funneled illegal kickbacks to patients
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`through CDF. Regeneron did so through concerted action with CDF and the Lash Group, which
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`jointly operated and participated in the EYLEA4U program.
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`57.
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`Among other things, the EYLEA4U program connected Eylea patients with CDF
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`and facilitated payments for Eylea by health insurance plans like Horizon. The program enabled
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`Regeneron to neutralize the cost-sharing provisions in Horizon’s and other plans’ contracts, thereby
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`inflating demand for Eylea in competition with less-expensive alternative drugs and enabling
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`Regeneron to maintain Eylea’s exorbitant price.
`
`58.
`
`As a result, health insurance plans like Horizon were forced to pay for a higher
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`volume of Eylea prescriptions, at higher prices, than they would have paid for in the absence of
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`Regeneron’s illegal conduct. To date, Horizon has paid more than $180 million, including nearly
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`$1 million in Massachusetts, to cover patients’ costs with respect to Eylea. Regeneron’s illegal
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`scheme targeted claims for Eylea paid by Horizon and other health insurance plans.
`
`59.
`
`In 2020, Regeneron’s scheme was disclosed for the first time in documents and
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`testimony made public by the DOJ Action against Regeneron now pending in this Court. The DOJ
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`Action disclosed the following:
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 15 of 42
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`60.
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`In 2011, in anticipation of the FDA’s approval of Eylea, Regeneron retained Xcenda,
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`LLC (“Xcenda”), a consulting subsidiary of AmerisourceBergen Corp., to advise Regeneron with
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`regard to how Eylea should be marketed. Among other things, Xcenda advised Regeneron that use
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`of a PAP could help Regeneron increase its profits by inflating Eylea’s market demand and price.
`
`61.
`
`At the time, Regeneron was considering setting Eylea’s price at $1,500 per dose. In
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`a presentation dated May 12, 2011 (Ex. 1), Xcenda projected that use of a PAP could enable
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`Regeneron to increase Eylea’s price by as much as 30%, to $1,950 per dose.
`
`62.
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`Assuming a price increase to $1,950 per dose, Xcenda projected that Regeneron
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`would need to pay roughly $3 million in 2012 to cover Medicare patients’ cost-sharing obligations,
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`but would achieve significantly more than that amount in increased sales revenue. Xcenda’s
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`analysis is shown in the following slide (id. at 42):
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 16 of 42
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`
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`63.
`
` Xcenda made clear that federal law barred manufacturers from coordinating with
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`PAPs in certain ways. At the same time, however, Xcenda noted that compliance with the law
`
`posed a financial disadvantage: the manufacturer would face “[u]nknown allocation of funds
`
`among products in the same therapeutic space,” and thus the manufacturer might inadvertently
`
`subsidize competing drugs. Id. at 31. Xcenda explained in the following slide (id. at 58):
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`“Donations to copay charities have several limitations, such as no control over which product is
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`supported, limited data provided by the foundation, and no control over operations of the fund (e.g.,
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`income eligibility criteria or spend-down).”
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`Case 1:22-cv-10493-FDS Document 1 Filed 04/04/22 Page 17 of 42
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`64.
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`Xcenda also pointed out that permissible forms of patient assistance, such as
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`“providing free [E