By Brendan Pierson

Feb 19 (Reuters) - Regeneron REGN.O has won a court ruling that will make it harder for U.S. authorities to win a lawsuit accusing it of paying illegal kickbacks through a charity to promote the use of its expensive eye drug Eylea.

In a unanimous opinion on Tuesday, a three-judge panel of the 1st U.S. Circuit Court of Appeals found that the United States must prove that the alleged kickbacks directly caused Medicare, the federal health insurance program for Americans aged 65 and older, to make payments for Eylea that they otherwise would not have made.

The government had argued that proving illegal kickbacks alone would be enough.

The U.S. Department of Justice and Regeneron did not immediately respond to requests for comments.

Eylea, which treats macular degeneration and costs nearly $2,000 per injection, is Regeneron's top-selling drug, accounting for nearly $6 billion of the company's $7.6 billion in product sales last year.

The Justice Department sued the company in 2020, saying that it paid kickbacks through a charity that helped cover Medicare patients' drug costs.

Drug companies are prohibited from subsidizing co-payments for patients enrolled in Medicare, but they may donate to non-profits providing co-pay assistance as long as they are independent.

The government's lawsuit, however, alleged that the charity was not independent and instead acted as a conduit for Regeneron to ensure that almost no Medicare patient paid any co-pays for Eylea, encouraging its use. The case was part of a broader probe of drugmakers' use of assistance charities, which has resulted in more than $1 billion in settlements.

It alleged that the payments violated a 2010 amendment to the federal Anti-Kickback Statue, which stated that a claim for treatment "resulting from" an illegal kickback is considered false or fraudulent under the federal False Claims Act.

In 2023, Chief U.S. District Court Judge F. Dennis Saylor dealt the government a setback, ruling that to prove that a Medicare claim was false, it must prove that it would not have been made "but for" an illegal kickback. The government had argued that the presence of a kickback made the claim false, even if the claim would have been paid anyway.

The 1st Circuit, affirming Saylor, said that the words "resulting from" in the law imposed a "but for" causation standard.

Circuit Judge William Kayatta said that while there might be contexts in which "resulting from" could be read to impose a different causation standard, there was "no license to read 'resulting from' as requiring no actual causality whatsoever," as the government argued.

Kayatta was joined by Circuit Judges O. Rogeriee Thompson and Lara Montecalvo.

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:

Court weighs what US must prove in Regeneron kickback case

U.S. claims Regeneron paid kickbacks via charity to boost expensive drug

(Reporting By Brendan Pierson in New York)

((Brendan.Pierson@thomsonreuters.com; 332-219-1345 (desk); 646-306-0235 (cell);))