Pfizer Settles Kickback Case Associated with Copay Assistance For $24M

Pfizer pays the federal government nearly $24 million as part of a settlement to resolve allegations it funneled money through a foundation leading to illegal kickbacks.

The clients are not admitting wrongdoing or liability included in its agreement using the Department of Justice.

According to the settlement, from 2012 through 2021, Pfizer made donations to the Patient Access Network (PAN) Foundation, a copay assistance nonprofit organization, and then used a specialty pharmacy to influence Medicare patients taking its drugs toward the building blocks to pay for their copays.

“Pfizer knew the third-party foundation was using Pfizer's money to pay for the copays of patients taking Pfizer drugs, thus generating more revenue for Pfizer and masking the effect of Pfizer's price increases,” said U.S. Attorney Andrew Lelling, citing the settlement. “The Anti-Kickback Statute exists to protect Medicare, and also the taxpayers who fund it, from schemes like these.”

Drugmakers can't directly offer copay help Medicare or Medicaid beneficiaries under federal law. The problem is that covering such out-of-pocket costs for expensive drugs still leaves taxpayers with the bill through out the costs. Congress didn’t want beneficiaries to become shielded from price increases, allowing drugmakers to improve prices without risking that patients will switch to cheaper alternatives.

Pfizer spokeswoman Sally Beatty stressed the company takes compliance “very seriously.” The company is constantly on the donate to charities that provide help with copays.

“The Company believes everyone deserve access to medicines prescribed by their physicians,” she said in a statement presented to Kaiser Health News. “Pfizer is constantly on the believe these programs help patients lead healthier lives.”

Joel Hay, a health policy and economics professor in the University of Southern California, disagrees. “In essence, [copay programs give] the drug companies free rein to jack the cost as much as anything they want,” he said. “You totally dilute any effort for the doctor or consumer to consider carefully about whether these drugs are worth their cost.”

Pfizer gave the PAN Foundation $16.9 million in 2021, according to Kaiser Health News' Pre$cription for Power database, which provides coverage for contributions from drugmakers to patient groups in 2021 and can expand with time. Asked why the settlement was just $7 million a lot more than what Pfizer gave the PAN Foundation in 2021, the Department of Justice said its policy was not to discuss settlement amounts.

The chemotherapy drugs at the center from the alleged scheme were Sutent, which treats kidney cancer along with other cancerous tumors, and Inlyta, which also treats kidney cancer.

Sutent cost Medicare Part D $183 million in 2021 before rebates, or about $47,000 per patient. Medicare's spending for every unit of this drug had increased by 80 % because the illegal conduct allegedly began in 2012. Inlyta cost Medicare about $73 million in 2021, or about $57,000 per patient. Medicare spent 34 percent more about each unit of the drug in 2021 than it did this year.

Tikosyn, a Pfizer drug to treat an irregular heartbeat, seemed to be part of the alleged scheme, according to the settlement. The drugmaker raised the list price of 40 Tikosyn capsules from $220 to $317 in the final 3 months of 2021. It cost Medicare $107 million in 2021 before rebates.

Planning a cost increase, Pfizer caused the PAN Foundation to “create and finance a fund” for Medicare patients with a specific irregular heartbeat, the settlement says. “For the following nine months, Tikosyn patients taken into account virtually all of the beneficiaries of PAN's fund.”

Hay said the DOJ action is “long overdue.” Pfizer is among many drug companies participating in such behavior with assorted copay assistance nonprofits, he said, and the DOJ must have been aggressive about this “years otherwise decades earlier.”

“The fact is it's illegal underneath the False Claims Act,” he explained.

PAN Foundation President and CEO Daniel Klein said the foundation learned about the DOJ settlement Thursday.

“While PAN has received contributions from Pfizer, we endeavor to operate our patient assistance programs independent of any influence by donors,” he said. “Without the help PAN provides, many thousands of underinsured patients could be unable to afford their critical medications.”