Pfizer Fails Again in Its Quixotic Quest for Imprimatur of Its Proposal to Provide Direct Medicare Copay Assistance

In a perhaps final coda to Pfizer’s bizarre attempt to get the government or a court to bless blatant violations of the anti-kickback statute (AKS), the Second Circuit ruled today that the Department of Health and Human Services Office of Inspector General (HHS-OIG) did not err in issuing an unfavorable advisory opinion on Pfizer’s proposed “Direct Copay Assistance Program” (the program). The decision is wholly unsurprising and raises further questions about why Pfizer went to such great lengths to gain approval for the program.

Under the program, Pfizer would cover the Medicare copays for tafamadis, a drug that costs $225,000 per year. In its advisory opinion, HHS-OIG observed that attempts by “pharmaceutical manufacturers [to] blunt the impact of patient cost sharing [may] induce patients to fill prescriptions for costly medications . . . [and] remove a potential downward pressure on the price of the drugs.” The agency also concluded that the program “plainly” would violate the AKS because it would involve the offer of remuneration (copay assistance) to induce Medicare beneficiaries to purchase Pfizer’s drug.

For reasons that I have been unable to discern, Pfizer challenged HHS-OIG’s advisory opinion in federal district court. That court soundly rejected Pfizer’s suit, at one point remarking that “[t]his is not a close case.” Pfizer, Inc. v. U.S. Dep’t of Health & Human Servs., No. 1:20-cv-4920, 2021 WL 4523676, at *9 (S.D.N.Y. Sept. 30, 2021). Pfizer fared no better on appeal.

Although the Second Circuit began with a somewhat sympathetic summary of the facts (omitting mention, for example, of HHS-OIG’s observation that tafamidis was one of the most expensive drugs ever launched and, if used to treat all eligible patients, would cost Medicare $32.3 billion annually), the court of appeals gave short shrift to all of Pfizer’s substantive arguments. First, the court held that inducement under the AKS need not be “corrupt,” i.e., it need not corrupt the judgment of a clinician. Second, the court found that the “willfully” element of the AKS “does not require proof of any motive other than an intentional violation of a known legal duty.” Finally, the court looked askance at Pfizer’s suggestion that the advisory opinion would invite an enforcement action against a family member who offered to cover a loved one’s Medicare copay, since the AKS requires evidence of willfulness.

In my blog post about the district court opinion last fall, I observed that “[i]t is unclear why Pfizer brought this case.” I still have no idea what Pfizer was thinking.

Gregg Shapiro represents whistleblowers in pharmaceutical kickback and pricing cases, as well as in other types of health care fraud cases. He can be reached at 617-582-3875 or gshapiro@newmanshapiro.com.