Court weighs what US must prove in Regeneron kickback case
By Nate Raymond
July 22 (Reuters) -The U.S. Department of Justice on Monday urged a federal appeals court to overturn a judge's ruling that made it tougher for the government to win a lawsuit against Regeneron Pharmaceuticals REGN.O and prove the drugmaker engaged in an illegal kickback scheme.
Justice Department attorney Daniel Winik urged the Boston-based 1st U.S. Circuit Court of Appeals to overturn a ruling that would make it harder for the government to hold companies that pay kickbacks accountable under the False Claims Act.
He said that ruling was based on an interpretation of anti-kickback law that ran contrary to the goals of lawmakers who when amending the law in 2010 sought to strengthen the government's ability to pursue such claims, not weaken it.
"It really just defies logic," he said.
But some members of the three-judge panel appeared skeptical of his argument including U.S. Circuit Judge William Kayatta, who said the Justice Department was asking his court to look beyond the statute's plain text to what a few lawmakers said.
"What license do we have to delve into the statutory history on this?" he asked.
The False Claims Act allows the department and whistleblowers bringing cases on the government's behalf to sue companies to recover taxpayer funds paid out by government programs including Medicare and Medicaid based on false claims.
A separate law, the Anti-Kickback Statute, forbids paying kickbacks to generate healthcare business.
The Justice Department sued Regeneron in 2020 and accused it of using a charity that helps cover Medicare patients' drug costs as a means to pay kickbacks for using its expensive macular degeneration drug Eylea.
It alleged Regeneron funneled tens of millions of dollars through a patient assistance foundation to ensure virtually no one on Medicare had to pay co-pays, allowing it to boost sales of a drug that typically costs over $10,000 per year.
The lawsuit was filed as part of an industry-wide probe of drugmakers' financial support of patient assistance charities that has resulted in more than $1 billion in settlements with 12 drugmakers, four charities and one pharmacy.
But last year, Chief U.S. District Court Judge F. Dennis Saylor dealt the government a setback in agreeing with Regeneron that at trial the government would need to prove Medicare would not have paid for Eylea but-for any kickbacks patients received.
Saylor based his decision on a 2010 amendment to Anti-Kickback Statute that stated that any claim for services "resulting from" a violation of the kickback law constituted a false claim under the False Claims Act.
Winik during Monday's arguments acknowledged courts regularly read a phrase like "resulting from" as imposing a but-for standard to prove causation and that two other federal appeals courts have interpreted the law that way.
Paul Clement, Regeneron's lawyer, during Monday's arguments said that if Congress wanted to adopt a looser standard of legal liability, "the last words it would have used are 'resulting from."
Regeneron denies that its payments were kickbacks, and Clement said the government's case was based on "a pretty extravagant False Claims Act theory."
The case is United States v. Regeneron Pharmaceuticals, 1st U.S. Circuit Court of Appeals, No. 23-2086.
For the United States: Daniel Winik of the U.S. Department of Justice
For Regeneron: Paul Clement of Clement & Murphy
Read more:
Teva in talks to settle US lawsuit alleging MS drug kickbacks
U.S. claims Regeneron paid kickbacks via charity to boost expensive drug
Reporting by Nate Raymond in Boston
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