Key Takeaways for Pharma C-Suite Leaders
- Supreme Court review could redefine co-pay compliance boundaries. The Regeneron case is poised to establish a national legal standard for causation in kickback claims, with profound implications for how manufacturers structure and fund independent co-pay assistance programs.
- Patient access strategies must be compliance-resilient. Regardless of the legal outcome, pharma leaders must build patient support models that document independence, maintain operational firewalls, and withstand scrutiny from regulators, whistleblowers, and courts.
- The economics of affordability are under threat. A stricter causation standard could chill manufacturer donations to co-pay foundations, potentially raising costs for Medicare patients and risking declines in adherence to high-cost therapies.
The US Department of Justice’s (DOJ) long-running case against Regeneron Pharmaceuticals over alleged kickbacks tied to its blockbuster eye drug Eylea is no longer just a matter of one company’s legal risk. It is emerging as a precedent-setting dispute that could reshape how the pharmaceutical industry supports patient access and redraw the compliance boundaries for co-pay assistance programs.
At stake is the viability of one of the most widely used patient affordability models in the US. Depending on the outcome, manufacturers may either gain more legal certainty for properly structured assistance programs or face stricter limits that could constrain patient support, especially for Medicare beneficiaries.
The Regeneron Allegation: A $60 Million Question
The DOJ alleges that between 2013 and 2014, Regeneron donated about $60 million to the Chronic Disease Fund (now operating as Good Days), a third-party charitable foundation that covered Medicare beneficiaries’ co-pays for Eylea. By removing these out-of-pocket costs, the government argues, Regeneron encouraged higher utilization of Eylea, increasing the number of Medicare claims submitted and reimbursed.
The legal theory relies on the federal Anti-Kickback Statute (AKS), which prohibits offering or paying anything of value to induce the purchase of items reimbursable by federal healthcare programs. In 2010, the Affordable Care Act amended the AKS to specify that a claim “resulting from” a violation constitutes a false or fraudulent claim. A violation of the AKS can trigger liability under the False Claims Act (FCA), which allows the government—and whistleblowers—to seek treble damages and civil penalties.
From DOJ’s perspective, the donations were not purely philanthropic but strategically targeted to boost product sales. Regeneron counters that its contributions complied with applicable government guidance, were routed through an independent foundation, and were not tied to any specific prescribing decisions.
What Are Independent Co-Pay Foundations?
Independent co-pay foundations are nonprofit organizations that provide financial assistance to patients who cannot afford their out-of-pocket costs for prescription medications. These foundations typically operate by establishing disease-specific funds—for example, for macular degeneration, multiple sclerosis, or cancer—rather than funds tied to a specific drug or manufacturer.
The intent is to help patients afford treatment options without steering them toward a particular product. To qualify as independent under Office of Inspector General (OIG) guidance, these foundations must:
- Maintain operational independence from any single manufacturer.
- Base eligibility on objective financial and medical criteria, not on the use of a specific brand.
- Avoid sharing patient-identifying data with manufacturers that could link donations to particular prescriptions.
- Provide equal access to all covered drugs within the disease category, regardless of manufacturer, even if one company is the sole donor for that fund.
Pharmaceutical companies may contribute to these independent foundations to help reduce patient cost-sharing burdens, especially for Medicare patients who are not allowed to receive direct manufacturer co-pay coupons. However, the government has long warned that if a manufacturer uses such donations to influence prescribing—directly or indirectly—it can constitute an illegal kickback.
The Legal Battle: Defining “Resulting From”
The case hinges on the interpretation of a single phrase in the AKS: “resulting from.” The meaning of this phrase determines how causation is established in an alleged kickback case.
- DOJ’s view: Any Medicare claim “resulting from” a kickback is automatically false under the FCA. The government does not need to prove that the patient would not have obtained the drug without the alleged inducement. A loose causal link is sufficient.
- Regeneron’s view: The government must prove but-for causation—that, but for the alleged kickback, the claim would not have been submitted. This is a higher standard, requiring a direct cause-and-effect connection between the alleged conduct and the claim.
This difference is far from academic. The standard adopted will influence the government’s ability to pursue similar cases across the industry.
A Circuit Split and the Path to the Supreme Court
The First Circuit Court of Appeals recently sided with Regeneron, holding that the but-for causation standard applies. This decision aligns with rulings from the Sixth and Eighth Circuits but directly conflicts with the Third Circuit’s earlier adoption of the looser “link” test.
This circuit split makes the case a strong candidate for Supreme Court review. If the Court takes it up, its ruling will resolve the disagreement and set the legal standard nationwide. That decision will carry lasting consequences for pharmaceutical manufacturers, compliance officers, and market access strategies.
Why This Matters for Pharma
The outcome will directly impact the design and operation of patient assistance programs, particularly those that support Medicare beneficiaries through independent co-pay foundations.
If the but-for standard prevails:
- The DOJ will face a higher burden in proving causation, likely reducing FCA exposure for properly structured programs.
- Manufacturers could have more confidence in supporting patients via independent charities, as long as strict compliance controls are in place.
- The separation between patient support activities and commercial operations will remain important but may be easier to defend legally.
If the looser causal-link standard prevails:
- Donations to disease-specific charities could become riskier, even when handled through independent entities.
- More whistleblower actions may target manufacturer contributions, as the lower causation threshold makes allegations easier to pursue.
- Manufacturers may scale back patient assistance for Medicare patients, leading to higher out-of-pocket costs and potential adherence issues.
Market Access, Compliance, and Legal Strategy Implications
For market access leaders, the case is a warning that even well-intentioned affordability initiatives can come under intense regulatory scrutiny. The risk lies not only in actual inducement but in how government regulators or whistleblowers perceive the relationship between donations and prescribing behavior.
For compliance teams, the priorities are clear:
- Document independence between donations and any sales-related activities.
- Audit foundation relationships to ensure there is no inappropriate influence, communication, or data exchange.
- Maintain strong functional separation between commercial and patient support teams, with clear governance protocols.
For corporate counsel, it is essential to prepare for either legal outcome. This includes assessing the organization’s current risk posture, modeling the financial and operational impact under both causation standards, and ensuring that donation practices could withstand legal scrutiny no matter how the law is ultimately interpreted.
The Economics of Patient Support on the Line
This case is fundamentally about whether the government can treat virtually any charitable donation linked to a drug as a potential kickback. The decision will influence the economics of patient assistance in several ways:
- Program design: Companies may shift away from disease-specific donations toward broader, less product-tied support models.
- Budget allocation: Legal vetting of charitable donations will likely become more rigorous, potentially slowing or reducing funding decisions.
- Patient access: If charitable contributions decline, some patients—particularly those taking expensive specialty medications—could face higher costs, potentially lowering adherence and health outcomes.
A Decade of DOJ Scrutiny
The Regeneron case is not an isolated enforcement action. For more than a decade, the DOJ has pursued similar theories, resulting in high-profile settlements with multiple pharmaceutical companies. These cases have typically involved allegations that manufacturer donations to independent foundations were earmarked, in practice if not in form, for patients taking a particular drug.
Even as compliance programs have matured, the legal risks have not disappeared. The Regeneron litigation highlights that donations routed through independent entities are not immune from challenge, especially if the government believes they are effectively covering a patient’s co-pay for a specific product.
Strategic Takeaways for Pharma Executives
For senior pharmaceutical leaders, the Regeneron case underscores several critical actions:
- Scenario-plan for both standards: Build compliance and patient assistance strategies that function effectively whether the but-for or the causal-link test is adopted.
- Invest in compliance firewalls: Go beyond meeting current requirements by designing programs to withstand future, potentially stricter enforcement.
- Engage in policy advocacy: Collaborate with industry associations to push for legal clarity that protects legitimate patient support efforts.
- Educate internal teams: Ensure that all departments involved in patient support understand compliance guardrails and documentation expectations.
The Supreme Court’s Potential to Reshape the Landscape
If the Supreme Court adopts the but-for causation standard, the DOJ’s leverage in FCA cases involving patient assistance will be reduced, providing greater legal certainty for compliant programs. If it adopts the looser standard, manufacturers may need to significantly alter how they engage with independent foundations, potentially curtailing support that helps Medicare patients afford high-cost therapies.
Either way, the decision will set the rules for how manufacturers can balance patient access, compliance, and business growth for years to come.
The Stakes for Pharma Leadership
The Regeneron kickback case is about much more than one company’s alleged conduct. It is a bellwether for the future of patient affordability programs in the United States. At stake is the legal framework that determines how manufacturers can help patients overcome cost barriers without running afoul of the Anti-Kickback Statute and the False Claims Act.
Pharmaceutical executives should watch this case closely. The Supreme Court’s eventual decision could redefine the economics of patient support and the compliance strategies that sustain it, shaping the future of access to innovative medicines in the US.
About the Author
Dr. Thani Jambulingam is a professor in food, pharma and healthcare at Erivan K. Haub School of Business, Saint Joseph’s University, Philadelphia. He is a pharma and healthcare strategist and contributing writer to Pharmaceutical Executive. Their work focuses on the intersection of emerging technologies, supply chain, and commercial strategy.
