Pfizer’s Proposed Copay Assistance Program Violates Anti-Kickback Statute: Pfizer, Inc. produces and sells a drug called tafamidis that treats a rare, progressive heart condition known as transthyretin amyloid cardiomyopathy. Without treatment, patients have a median life expectancy of two to three-and-a-half years after diagnosis. An estimated 100,000 to 150,000 Americans, most of whom are elderly, suffer from the condition. Tafamidis is not a cure, but it slows the decline in quality of life, reduces hospitalization rates, and typically helps patients live longer.
The FDA designated tafamidis as an “orphan drug,” which is a special classification that offers financial incentives, including potential market exclusivity, for the development of treatments for rare disease. A 2020 study concluded that tafamidis is the most expensive cardiovascular drug ever launched in the United States (Pfizer charges $225,000 for a one-year course of tafamidis). Medicare beneficiaries who use tafamidis are responsible for a co-pay of approximately $13,000 per year. To make the expensive treatment more affordable, Pfizer proposed a Direct Copay Assistance Program, through which Pfizer would directly cover the cost of a patient’s co-pay for tafamidis. HHS OIG issued an advisory opinion stating that the Direct Copay Assistance Program would violate the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b)(2)(B).
The Anti-Kickback Statute
The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b (“AKS”), prohibits, in relevant part, “knowingly and willfully offer[ing] or pay[ing] any remuneration” to “induce” an individual to purchase a federally reimbursable healthcare product. § 1320a-7b(b)(2)(B).
The United States Court of Appeals for the Second Circuit (“Federal Appellate Court”) stated in its opinion dated July 25, 2022: “a quid pro quo transaction is not necessarily corrupt. And “to gain influence over the reason or judgment” of a person is simply the definition of “persuade,” which is neutral in connotation. Pfizer’s attempt to read a more sinister intent into the phrase “any remuneration . . . to induce” fails … the term “any remuneration” comes before the specific list of items and cannot fairly be characterized as a “residual” phrase. Rather, as noted above, the parenthetical – “(including any kickback, bribe, or rebate)” – is better read as a list of nonexhaustive examples … “Any remuneration,” however, is not ambiguous, at least in this context, and it therefore must be read according to its plain meaning … if a company submits a claim for federal reimbursement that is based on goods or services rendered in violation of the AKS, then the claim may be “false” for the purposes of the FCA simply because it is the product of a material statutory violation … the AKS does not apply to those who are unaware that such payments are prohibited by law and accidentally violate the statute. Contrary to Pfizer’s assertion, the mens rea element goes no further.”
The Federal Appellate Court affirmed the federal district court opinion that “Because the stated intent of the payments Pfizer proposes here [is] to increase the number of Medicare beneficiaries who purchase the drug, the Court is unable to . . . issue judgment in [Pfizer’s] favor on the APA claim, since the AKS prohibits all remuneration that induces purchases of drugs like tafamidis . . . .”
Source Pfizer, Inc. v. HHS, 21-2764-cv.
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