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Pfizer to pay US nearly $24M to settle kickback accusations

U.S. biopharmaceutical giant Pfizer Inc. has agreed to pay nearly $24 million to settle claims that it paid illegal kickbacks to ensure that Medicare beneficiaries kept using, and the government kept covering, three of the company's medicines.

The U.S. Justice Department accused Pfizer of using a charitable foundation as a conduit to cover the copayments for Medicare patients taking the company's renal cell carcinoma drugs Sutent and Inlyta or its atrial fibrillation medicine Tikosyn.

The New York-based drugmaker said the settlement agreement was "neither an admission of facts nor liability by the company nor a concession by the United States government that its contentions are not well-founded."

Drugmakers are prohibited under the U.S. federal Anti-Kickback Statute from offering any remuneration — directly or indirectly — to induce patients to purchase the company's products. Officials said that includes covering copayments.

Congress included copayment requirements in Medicare, the government's insurance program for seniors and the disabled, to help drive market forces to serve as a check on healthcare costs, including on the prices drug manufacturers charge for their medicines.

Instead of providing Sutent and Inlyta to Medicare beneficiaries who met the financial qualifications to participate in the company's existing free drug program, Pfizer used a third-party specialty pharmacy to transition those patients to the foundation, which covered their Medicare copayments, the Justice Department said.

Pfizer allegedly made donations to the foundation to enable it to cover those copayments, the government added.

Pfizer also was accused of working with that foundation to create and finance a fund for Medicare beneficiaries taking Tikosyn. The Justice Department said Pfizer coordinated the opening of the fund with the implementation of the company's price increases for Tikosyn. The drugmaker then referred patients to that fund, the agency stated.

"For the next nine months, Tikosyn patients accounted for virtually all of the beneficiaries whose copayments were paid by the fund," the Justice Department said.

That scheme was meant to use the third-party foundation "to saddle Medicare with extra costs," which generated additional revenue for the drugmaker, while "masking the effect of Pfizer's price increases," said U.S. Attorney Andrew Lelling of the District of Massachusetts.

"The Anti-Kickback Statute exists to protect Medicare and the taxpayers who fund it from schemes like these," Lelling said.

But Lelling also commended Pfizer for stepping forward to "resolve these issues in a responsible manner."

"This resolution reflects the company's desire to put this legal matter behind it and focus on the needs of patients," Pfizer said in a May 24 statement. "The company believes all individuals deserve access to medicines prescribed by their physicians. Donations to independent charitable organizations can provide significant assistance to patients with their copayments for prescriptions, and Pfizer continues to believe these programs help patients lead healthier lives."

Corporate integrity agreement

As part of its settlement, Pfizer has entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General, or OIG, which requires the company to implement measures to ensure that arrangements and interactions with third-party patient assistance programs comply with the law.

The agreement requires reviews by an independent organization, compliance-related certifications from company executives and board members, and the implementation of a risk assessment and mitigation process.

"Without true independence, as we have seen in this case, drug companies may use patient assistance programs as conduits for improper payments that harm Medicare," said Gregory Demske, chief counsel to the OIG.

Pfizer said it would continue to donate to independent charity patient assistance programs.

Broader probe

Pfizer noted that it had disclosed in February 2017 that it was among a number of companies that had received subpoenas as part of the government's inquiry into organizations that provided financial assistance to Medicare patients.

In December 2017, United Therapeutics Corp. agreed to pay $210 million to resolve claims that it used a foundation as a conduit to fund the copayments for Medicare patients taking the company's pulmonary arterial hypertension drugs, violating the federal False Claims Act.

On May 8, Jazz Pharmaceuticals PLC disclosed that it had reached a $57 million settlement involving similar allegations.