Pfizer’s Supreme Court Appeal Over Anti-Kickback Lawsuit

Pfizer logo on the side of a store - Pfizer kickback lawsuit concept

In October 2022, Pfizer filed a petition with the United States Supreme Court seeking to overturn a decision regarding the anti-kickback lawsuit which prohibited Pfizer from providing financial assistance to Medicare beneficiaries to obtain Vyndaqel and Vyndamax, drugs that are commonly prescribed to treat transthyretin amyloid cardiomyopathy (ATTR-CM), a rare but life-threatening heart disease.

The drugs currently cost $225,000 per year, with estimated patient co-pays of approximately $13,000. Pfizer’s proposed assistance program would lower that out-of-pocket cost to just $35 per month ($420 per year).

According to a securities filing, Pfizer earned nearly $1 billion domestically from sales of Vyndaqel and Vyndamax in the first nine months of 2022.

Pfizer Challenges Department of Health and Human Services’ Interpretation of Anti-Kickback Statute

Pfizer is challenging the Department of Health and Human Services (HHS) interpretation of the anti-kickback statute. At issue is whether drugmakers should be allowed to use charity programs to help Medicare patients afford expensive drugs.

In recent years, the government has sought to rein in Medicare spending by cracking down on rebate programs offered by pharmaceutical companies.

Violations of the anti-kickback statute carry the threat of fines, felony convictions, and prison time. Violations can also trigger massive civil penalties and damages under the False Claims Act. As a result, numerous drugmakers have entered into FCA settlements worth tens of millions of dollars apiece for allegedly using patient assistance programs as conduits for kickbacks.

The Pfizer kickback lawsuit centers on whether the anti-kickback statute requires an element of corrupt intent. Both the HHS and two lower courts believe ill intent ot willfulness is not needed for financial support payments to Medicare patients to be considered illegal.

Pfizer contends that the anti-kickback statute is only violated if the person offering payment to induce the purchase of a federally reimbursed healthcare item intends to influence the recipient’s medical decision-making.

According to Pfizer, its proposed patient assistance program “poses no risk of corrupting independent medical decision-making,” as Vyndaqel and Vyndamax are the only FDA-approved drugs to treat ATTR-CM. They argue that the only way patients would be able to obtain a prescription for the medication is if a doctor has already given the patient an ATTR-CM diagnosis and a prescription for the medication, and that, because the drugs are the only ones to receive FDA approval, there is no way Pfizer could have induced the purchase of the drugs through the particular program.

History of the Pfizer Kickback Lawsuit

In 2019, Pfizer requested an advisory opinion from the Health and Human Services Office of Inspector General (HHS OIG) on the legality of its proposed patient assistance program. In December 2019, HHS OIG issued an opinion finding that Pfizer’s proposed program would violate the anti-kickback statute. In the opinion, HHS OIG noted that the proposed program would involve conduct prohibited under the anti-kickback statute as it would “present more than a minimal risk of fraud and abuse under the Federal anti-kickback statute” and is “highly suspect…because one purpose of the [proposed program]—perhaps the primary purpose—would be to induce Medicare beneficiaries to purchase [Pfizer’s] federally reimbursable Medications.”

HHS OIG further noted that the program "appears to be calibrated to circumvent one of the key pricing controls—exposing beneficiaries to the economic effects of drug pricing" and that if Pfizer covered the copays, then "the Part D program and taxpayers would bear the brunt of the drug's cost, with [Pfizer] benefiting from each purchase."

HHS OIG went on to state, “If pharmaceutical manufacturers could subsidize copayments for their own products, they would have an incentive to increase prices, potentially at additional cost to federal health care programs and beneficiaries who are unable to obtain copayment support.”

Pfizer appealed the HHS OIG opinion to the United States District Court for the Southern District of New York and the Second Circuit Court of Appeals. Both courts agreed with the HHS OIG’s interpretation. Pfizer has now appealed the decision to the U.S. Supreme Court.

Pfizer Supreme Court Petition Claims Violation of Anti-Kickback Statute Requires Corrupt Intent

In its petition, Pfizer argues that the anti-kickback statute requires a corrupt intent for financial support to Medicare patients to be considered illegal. They argue that HHS OIG’s interpretation is overly broad and “outlaws a wide swath of routine, beneficial conduct.” They also claim that the way HHS and lower courts have construed the law violates the Supreme Court’s “longstanding efforts to ensure that criminal laws do not sweep more broadly than intended.” Nonetheless, both HHS and the two lower courts disagree, finding that intent is not a necessary component for those payments to be considered kickbacks.

Pfizer’s argument has attracted broad support from industry allies—including Johnson & Johnson and trade group Pharmaceutical Research and Manufacturers of America—who filed amicus briefs asking the Supreme Court to take the case.

Hope Lefeber is a New York federal criminal defense attorney. Her practice focuses on federal white-collar criminal defense, including cases involving mail and wire fraud­, health care fraud, securities fraud, criminal tax violations, money laundering, environmental crimes, false claims act charges, and mortgage fraud, as well as drug­ charges and other serious crimes.

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