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Pfizer Agrees to Pay Nearly $24 Million to Resolve Alleged False Claims Act Violations

The government has long maintained that kickback schemes interfere with a healthcare professional’s decision making process. Thus, it has been determined to halt such schemes when they arise. This was shown late last month, when the Justice Department announced that drug maker Pfizer has agreed to pay $23.85 million to resolves claims that it violated the False Claims Act when it used a foundation to channel money to the co-pays of Medicare patients who were taking three of its drugs. By doing this, Pfizer is also alleged to have violated the Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The Anti-Kickback Statute prohibits pharmaceutical companies and other healthcare providers from offering, directly or indirectly, any remuneration for its products or services.

Specifically, the government alleged that Pfizer used a foundation as a conduit to pay co-pays for patients who used three of its drugs: Sutent, Inlyta and Tikosyn. Furthermore, the government alleged that Pfizer used a third party specialty pharmacy to move certain patients to the foundation, which covered the patients’ Medicare co-pays. According to the government, Pfizer then made donations to the foundation it had set up as a conduit and received confirmation that the co-pays had been funded. With regards to its drug Tikosyn – which treats arrhythmia in patients with atrial fibrillation or atrial flutter – the government alleges that Pfizer arranged for the foundation to compensate patients for a 2015 price increase. Knowing that this price increase would cause some Medicare beneficiaries co-pay obligations to increase, Pfizer set up a fund that specifically financed patients’ co-pays. This is seen as an incentive for patients to continue using Tikosyn. Indeed, Tikosyn patients accounted for nearly all the beneficiaries whose copayments were paid by the fund.

“Pfizer used a third party to saddle Medicare with extra costs,” said United States Attorney Andrew E. Lelling. “According to the allegations in today’s settlement agreement, Pfizer knew that the third-party foundation was using Pfizer’s money to cover the co-pays of patients taking Pfizer drugs, thus generating more revenue for Pfizer and masking the effect of Pfizer’s price increases. The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these. At the same time, we commend Pfizer for stepping forward to resolve these issues in a responsible manner.” In addition to the settlement Pfizer has agreed to pay, the pharmaceutical giant has also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). Under the terms of the CIA, Pfizer must implement measures designed to ensure that its interactions with third-party patient assistance programs comply with the law. They are also subject to reviews by an independent organization and must implement a risk assessment and mitigation process.

“Our corporate integrity agreement promotes independence between Pfizer and any patient assistance programs to which it may donate,” said Gregory E. Demske, Chief Counsel to the Inspector General for the United States Department of Health and human Services. “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.” Since 2009, the government has waged a campaign against healthcare fraud which has increased the number of reported whistleblower Medicare cases. The False Claims Act is one of the tools it has used to do so. Whistleblowers who report fraud and abuse usually engage the services of a qui tam law firm