Pfizer Inc. v. United States Dep't of Health & Human Servs.

• Decision Date: 30 September 2021
• Docket Number: 1:20-cv-4920 (MKV)
• Parties: PFIZER INC., Plaintiff, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

PFIZER INC., Plaintiff,
v.
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.

No. 1:20-cv-4920 (MKV)

United States District Court, S.D. New York

September 30, 2021

OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

MARY KAY VYSKOCIL, United States District Judge.

In this case, Plaintiff Pfizer Inc. seeks declarations that one or both of two potential co-pay assistance programs, if implemented, would not violate the federal Anti-Kickback Statute (“AKS”), and Beneficiary Inducement Statute (“BIS”). Before this case was filed, the federal government, acting through the Office of the Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”), reviewed the programs and notified Pfizer that at least one of the of them could violate the statutes if implemented as Pfizer intended. The consequences of a violation could be dire for Pfizer, potentially including civil or criminal monetary penalties and exclusion of all Pfizer products from eligibility for coverage under Medicare and Medicaid. See 42 U.S.C. §§ 1320a-7, 1320a-7a, 1320a-7b.

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Before the Court are cross-motions from the parties, both seeking judgment in their favor.^[1] Following careful review of the parties' submissions and having heard oral argument on the motions, Defendants' motion is GRANTED, and Plaintiff's motion is DENIED.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Pfizer's Drug and Proposed Programs

The Parties substantially agree on the facts relevant to this dispute. In light of that, the Court cites to the Complaint [ECF No. 1] (‘Cpl.”). For facts not contained in the complaint, the Court cites the administrative record of proceedings before the Department of Health and Human Services [ECF No. 46] (“AR”).

Pfizer produces and markets a drug called tafamidis^[2] to treat Transthyretin Amyloid Cardiomyopathy (“ATTR-CM”). Cpl. ¶ 1. ATTR-CM is a rare, progressive condition that causes deposits of amyloid protein to be deposited in the heart muscle. Cpl. ¶ 25. As a result, the afflicted person may experience progressive heart failure, culminating in being unable to perform even basic life tasks. Cpl. ¶ 25. Patients with diagnosed ATTR-CM have a life expectancy of 2-3.5 years after diagnosis. Cpl. ¶ 25. There are estimated to be approximately 100, 000-150, 000 people afflicted with ATTR-CM in the United States, with higher concentrations among the elderly and among African American males. Cpl. ¶ 3, 27. Tafamidis

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is currently the only FDA-approved drug to treat ATTR-CM. Cpl. ¶¶ 42-43. The drug was developed through extensive testing and trials over the course of nearly 20 years and benefitted from “orphan drug” classification from the FDA.^[3] Cpl. ¶¶ 28-41.

Because ATTR-CM disproportionately affects older Americans, a large proportion of the population eligible for treatment with tafamidis receives Medicare. Cpl. ¶¶ 45, 55. Medicare Part D is the portion of Medicare concerned with outpatient prescription drugs like tafamidis. Cpl. ¶ 45. An integral part of Medicare Part D is the cost-sharing baked into the scheme. Through a complicated scheme, and as relevant to the drugs in this case, Medicare Part D participants are responsible for certain deductibles and co-pays based on the cost of the drugs doctors prescribe them. In 2020, for example, Medicare Part D participants were responsible for a $435 deductible before they received any assistance. Cpl. ¶ 46. Then, a participant has to contribute 25% of all costs until the total costs of his or her medications reached the “catastrophic coverage” threshold (in 2020, $9, 303). Cpl. ¶ 46. In real numbers, this means that a Medicare Part D enrollee who took only brand-name drugs was responsible for $2, 652 before receiving “catastrophic coverage.” Upon reaching that threshold, the participant is responsible for 5% of all remaining costs, with no upper limit. Cpl. ¶ 46.

In order to assist lower income Medicare Part D participants, and to dissuade patients from foregoing coverage, the federal government provides co-pay support for any person whose income is less than 150% of the federal poverty level. Cpl. ¶ 49. Surveys of Medicare Part D participants suggest that approximately 29% of all Part D participants fall in this range. Cpl. ¶ 49. However, Pfizer suggests that the upper limit for this additional support is too low, and

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fails to include all Medicare recipients who otherwise cannot afford the Part D cost-sharing.^[4]The company offers survey evidence that at least 25% of new Part D enrollees will forego prescriptions or care if they are asked to pay more than $50 and that almost 50% of cancer patients asked to pay more than $2, 000 out of pocket did not fill prescriptions. Cpl. ¶ 51.

Tafamidis costs $225, 000 per year. AR 2, 12, 125. As a result of the payment scheme outlined above, Medicare Part D participants would pay approximately $13, 000 per year in cost-sharing, absent assistance, for the medication. Cpl. ¶ 52. Pfizer suggests that while affluent patients may be able to afford that amount, there is a substantial number of “middle-income” patients who cannot pay these prices. Cpl. ¶¶ 53-55. Indeed, Pfizer states that even if tafamidis's price was cut in half, patients would still be required to pay more than $8, 000 per year. Cpl. ¶ 53. In light of this substantial barrier to treatment, Pfizer sought to create its own co-pay assistance programs. Cpl. ¶ 7.

Pfizer has proposed two programs in which it would provide additional assistance to patients in order to limit their costs to a maximum of $35 a month. First, it proposes a “Direct Copay Assistance Program” (the “Direct Program”) under which Pfizer would provide funds directly to the patient. Cpl. ¶ 61. Pfizer proposes that to be eligible for assistance in the Direct Program, “patients must: (1) be prescribed tafamidis for an on-label (approved) indication, that is, ATTR-CM; (2) be United States residents; and (3) meet program criteria for financial need tailored to address the burden otherwise faced by middle-income patients who are unable to access other available resources.” Cpl. ¶ 62. Pfizer states that it would not advertise the program or use it to solicit patients before the drug is prescribed. Cpl. ¶ 63. Second, Pfizer proposes an

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assistance program involving a Pfizer-supported charity (the “Charity Program”). For this, Pfizer would fund an existing independent charity to develop its own guidelines and programs to assist Part D participants with payments for tafamidis. Cpl. ¶ 70. While Pfizer would communicate with the charity about funding needs, the charity would otherwise operate independently and develop its own guidelines for aid programs. Cpl. ¶ 72.

Relevant to this case and these programs, Pfizer is currently subject to a “Corporate Integrity Agreement” signed as a part of a $23.9 million settlement of earlier AKS claims related to a purportedly independent charity Pfizer attempted to use as a part of a different co-pay assistance program. See AR 480, 483. The agreement, signed in 2018, provides that for five years, Pfizer will contribute to an independent charity co-pay assistance program only if:

a. . . . Pfizer has not made and shall not make . . . suggestions or requests to the Independent Charity PAP about the identification, delineation, establishment, or modification of disease state funds;

b. Pfizer does not and shall not exert any direct or indirect influence or control over the Independent Charity PAP's process or criteria for determining eligibility of patients who qualify for its assistance program;

[ . . . ]

d. Pfizer does not and shall not provide donations for a disease state fund that covers only a single product or that covers only Pfizer's products.

AR at 501-02.

B. The Administrative Review

To combat fraud and abuse in connection with Medicare and Medicaid, Congress enacted the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b (“AKS”). In relevant part, that statute prohibits:

knowingly and willfully offer[ing] or pay[ing] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce [a] person . . . to purchase . . . or arrange for or recommend purchasing . . . any good, facility, service, or item for which payment

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may be made in whole or in part under a Federal health care program [defined elsewhere as Medicare and Medicaid]. 42 U.S.C. § 1320a-7b(b)(2)(B).

Violations of the AKS include criminal and civil sanctions, up to and including a pharmaceutical company's exclusion entirely from federal reimbursement for any of its medications. Cpl. ¶ 122; see also 42 U.S.C. § 1320a-7(b)(7) (permitting the Secretary of Health and Human Services to “exclude . . . from participation in any Federal health care program” any person or entity that violates the AKS).

A similar regime is contained within the Beneficiary Inducement Statute (“BIS”), 42 U.S.C. § 1320a-7a. In relevant part, this statute subjects to a civil penalty any entity that: “offers to or transfers remuneration to any individual eligible for benefits under [a federal or state healthcare program] . . . that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under [a federal or state healthcare program].” 42 U.S.C. § 1320a-7a(a)(5). Certain definitions and exceptions apply only to the BIS and not to the AKS, including specifically a definition of “remuneration” that specifically excludes “waiver of coinsurance and deductible amounts” except in limited circumstances. 42 U.S.C. § 1320a-7a(i)(6).

Because the threat of sanctions and criminal charges for...