On Thursday, May 24, 2018, Pfizer, Inc., agreed to pay $23.85 million to resolve claims that it used a foundation as a conduit to pay the copays of Medicare patients taking Pfizer drugs.
The United States Department of Justice (DOJ) alleged that Pfizer used a foundation to pay the copay obligations of Medicare patients taking three Pfizer drugs: Sutent, Inlyta, or Tikosyn. The DOJ alleged that instead of giving Sutent and Inlyta to Medicare patients who met the financial qualifications of Pfizer’s free drug program, the company used a third-party specialty pharmacy to transition certain patients to the foundation, which covered the patients’ Medicare copays. Pfizer allegedly made donations to the foundation to enable it to cover the copays of the patients and also received confirmation from the foundation that it did fund the copays.
With respect to Tikosyn, Pfizer raised the wholesale acquisition cost by over forty percent in the last three months of 2015. The company allegedly knew that the price increase would also increase the copay requirements for Medicare beneficiaries, and thereby prevent some patients from being able to afford the drug. Pfizer allegedly worked with the foundation to create and finance a fund for Medicare patients suffering from arrhythmia in patients with atrial fibrillation or atrial flutter (the condition treated by Tikosyn). Then, the company allegedly coordinated the opening of the fund with the implementation of the price increase and referred patients to the fund.
“Pfizer used a third party to saddle Medicare with extra costs,” said United States Attorney Andrew E. Lelling. “According to the allegations in today’s settlement agreement, Pfizer knew that the third-party foundation was using Pfizer’s money to cover the co-pays of patients taking Pfizer drugs, thus generating more revenue for Pfizer and masking the effect of Pfizer’s price increases. The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these. At the same time, we commend Pfizer for stepping forward to resolve these issues in a responsible manner.”
Pfizer has also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). The five-year CIA requires, among other things, that Pfizer implement measures designed to ensure that arrangements and interactions with third-party patient assistance programs are compliant with the law. In addition, the CIA requires reviews by an independent review organization, compliance-related certifications from company executives and Board members, and the implementation of a risk assessment and mitigation process.
“Our corporate integrity agreement promotes independence between Pfizer and any patient assistance programs to which it may donate,” said Gregory E. Demske, Chief Counsel to the Inspector General for the United States Department of Health and Human Services. “Without true independence, as we have seen in this case, drug companies may use patient assistance programs as conduits for improper payments that harm Medicare.”
In a statement released by Pfizer, the company notes, “The CIA sets certain requirements for Pfizer’s U.S. compliance program, most of which are reflected in Pfizer’s existing compliance program. Pfizer takes compliance very seriously, and regularly enhances its compliance program to help ensure its controls meet or exceed the complex and evolving legal, regulatory and industry requirements, as well as the expectations of patients and providers.”
Also included in the statement released by Pfizer is the following sentiment, “This resolution reflects the Company’s desire to put this legal matter behind it and focus on the needs of patients. The Company believes all individuals deserve access to medicines prescribed by their physicians. Donations to independent charitable organizations can provide significant assistance to patients with their copayments for prescriptions, and Pfizer continues to believe these programs help patients lead healthier lives. As an element of Pfizer’s efforts to help ensure patients have access to critical medicines, Pfizer continues to donate to independent charity patient assistance programs.”
For a more in-depth look at this settlement, see the upcoming issue of our sister publication, Life Science Compliance Update.
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