: Pfizer argues its case in federal court for helping seniors meet drug copays

The lawsuit against the U.S. Department of Health and Human Services, filed last year, is a test of federal policies that block drug manufacturers from giving Medicare patients direct copay assistance and restrict their ability to funnel such assistance through independent patient-assistance charities. Pharmaceutical companies offering anything of value to induce Medicare patients to take their drugs risk running afoul of federal anti-kickback laws.

In seeking a legal go-ahead for the copay assistance programs, “Pfizer is asking the court to do something unprecedented,” Justice Department lawyer Jacob Lillywhite said at the virtual hearing. Such a ruling, he said, would upend decades of case law and agency guidance and “bless [Pfizer’s] program to induce Medicare beneficiaries to purchase” tafamidis. Ilana Eisenstein, a DLA Piper lawyer representing Pfizer, told the court that it “isn’t a remarkable idea” that Pfizer is concerned about the risk of enforcement action if it proceeds with its proposed programs and is seeking a judgment that those programs don’t violate the law.

A ruling in Pfizer’s favor could have profound implications for drug costs and government enforcement of anti-kickback laws, researchers and lawyers say. “Copays are really the only economic check on pricing to Medicare, because Medicare does not directly negotiate prices,” says Gregg Shapiro, a partner at whistleblower law firm Newman & Shapiro and former assistant U.S. attorney in Boston. “If pharmaceutical companies don’t have to think about copays when setting prices, then the sky is the limit.”

In his previous role with the Justice Department, Shapiro helped collect more than $1 billion in settlements in cases involving drug companies that allegedly violated anti-kickback laws by routing money through foundations to cover Medicare patients’ copays for the companies’ drugs. A Pfizer victory in this case “would have deleterious effects” on government anti-fraud efforts, he says. Although the ruling wouldn’t bind any other judge, he says, “it would be influential.”

A legal green light for the copay assistance programs could also provide a big sales boost for tafamidis, the only Food and Drug Administration–approved treatment for a heart condition called transthyretin amyloid cardiomyopathy (ATTR-CM). Pfizer sells tafamidis as Vyndamax and Vyndaqel, which are already important growth drivers for the company, generating $453 million in global revenue in the first quarter, up 88% operationally from a year earlier.

The hearing came on the same day that Senate Finance Committee Chair Ron Wyden, an Oregon Democrat, released a set of principles for drug-pricing reform, including allowing Medicare to negotiate prices.

Pfizer is seeking a judgment in favor of two proposed programs: One would provide direct copay assistance to Medicare patients who are prescribed tafamidis and have a financial need, while the other would fund an independent charity that would support Medicare beneficiaries diagnosed with ATTR-CM through copay assistance for tafamidis and other drugs to treat the symptoms or side effects of treatment.

A string of major drug companies has lately been snared in Justice Department cases alleging that their involvement with foundations covering Medicare patient copays triggered violations of anti–kickback laws. In December, the Justice Department announced that Biogen
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had agreed to pay $22 million to resolve claims that it illegally used foundations as a channel to cover copays of Medicare patients taking two of the company’s multiple-sclerosis drugs. Biogen “does not agree with the government’s view of the facts and believes that its conduct was appropriate,” the company said in a statement. The settlement is not an admission of any liability, the company said, and “Biogen continues to believe that independent charitable assistance programs help patients lead healthier lives.”

One point of contention in the Pfizer case is the breadth of the anti-kickback statute. Pfizer said in a court filing that an anti-kickback violation must involve some corrupt or improper purpose — and there’s no corruption in its proposed programs, it said, that could alter doctors’ clinical judgment. But the law’s scope isn’t limited to kickbacks and bribes, the government said in a court filing. The law generally has been interpreted quite broadly, and “if a court were to adopt Pfizer’s view, it wouldn’t just impact this case. It would impact the entire jurisprudence surrounding the anti-kickback statute,” says Jennifer Michael, a partner at Bass, Berry & Sims and former chief of the industry-guidance branch in the office of counsel to the inspector general at HHS.

The cost of tafamidis also raised questions during Tuesday’s hearing. Rather than waging a legal battle to help patients with tafamidis copays, “why doesn’t Pfizer just reduce the cost?” asked Judge Mary Kay Vyskocil. But even cutting the price by half, Eisenstein told the court, would leave a significant group of patients unable to afford the medication.

Under Medicare’s Part D prescription-drug benefit, enrollees must spend $6,550 out of pocket before they reach “catastrophic” coverage, where they are still typically responsible for 5% of a drug’s cost, with no cap. Medicare covers 80% of the drug cost in the catastrophic phase, and Part D plans pay the remaining 15%. Programs that cover Medicare patients’ copays, dampening their price sensitivity, remove a critical check on drug prices and stick taxpayers with most of the bill, researchers say. If patients don’t have to consider cost and drug companies can charge whatever they want, Shapiro says, “eventually Medicare will collapse.”