The drug-maker allegedly used a charitable foundation to boost its own revenues by covering the copays of Medicare patients taking the company's drugs.
For nearly $24 million, the pharmaceutical company Pfizer Inc. settled allegations it violated the False Claims Act by using a foundation to cover the copays of Medicare patients taking three of the company's drugs, the Department of Justice announced Thursday.
Rather than simply giving the drugs to patients who met the requirements for its free drug program, Pfizer allegedly used a specialty pharmacy to move some patients over to the foundation, which covered the Medicare patients' copays in violation of the anti-kickback statute, according to the DOJ's announcement. Pfizer was accused of donating funds to the foundation to cover the copay costs and securing confirmation through the specialty pharmacy that the foundation had, in fact, covered the copays.
"Pfizer used a third party to saddle Medicare with extra costs,” U.S. Attorney Andrew E. Lelling said in a statement. "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," Lelling added. "At the same time, we commend Pfizer for stepping forward to resolve these issues in a responsible manner."
- Undermines market forces: Acting Assistant Attorney General Chad A. Readler of the DOJ's Civil Division said kickbacks "undermine the independence of physician and patient decision-making," raising healthcare costs. The DOJ's announcement included a nod to the cost-containing power of "market forces," which the Medicare copay requirements were designed to encourage.
- Violates basic trust: Harold H. Shaw, special agent in charge with the FBI's Boston division said Pfizer's alleged scheme "violates the basic trust patients extend to the healthcare system and threatens the financial integrity of the Medicare program."
- Part 1: Two of the three drugs involved in this case were Sutent and Inlyta, which treat renal cell carcinoma. For these, Pfizer allegedly generated additional revenue by using its relationship with the foundation and third-party specialty pharmacy to cover Medicare patients' copays, rather than moving qualifying patients to its free program.
- Part 2: The third drug involved was Tikosyn, which is used to treat an irregular heartbeat. For this, Pfizer allegedly raised the wholesale acquisition cost for a 40-capsule package by more than 40% in the fourth quarter of 2015, knowing it would make the drug unaffordable for some patients. The company then allegedly worked with the foundation to establish a fund for Medicare patients needing Tikosyn, coordinating the fund's opening with the planned price increase.
- Corporate integrity agreement: As part of the settlement, Pfizer signed a corporate integrity agreement with the Health and Human Services Office of Inspector General. Gregory E. Demske, chief counsil to the HHS OIG, said the agreement "promotes independence between Pfizer and any patient assistance programs to which it may donate."
The investigation was conducted by the DOJ's Civil Division and the U.S. Attorney's Office for the District of Massachusetts in concert with the HHS OIG, FBI, Veterans Affairs OIG, and U.S. Postal Inspection Service.
In settling the allegations, Pfizer did not admit any wrongdoing.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.