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May 29, 2018

Pfizer agrees to pay $23.8M to settle kickback allegations

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    The Department of Justice (DOJ) on Thursday announced that Pfizer has agreed to pay $23.85 million to settle civil charges that it allegedly used an independent charity to pay unlawful kickbacks to Medicare.

    The settlement does not include admission of wrongdoing or liability.

    Just updated: Your cheat sheets for understanding health care's legal landscape

    Details of the charges

    DOJ alleged that Pfizer used the Patient Access Network Foundation (PAN) to pay illegal kickbacks to Medicare beneficiaries by covering their out-of-pocket costs for prescription drugs sold by Pfizer. For example, DOJ claimed that Pfizer in 2015 increased the price of its heart arrhythmia drug Tikosyn by 40%, and then worked with PAN to create a fund to help beneficiaries who could not afford the price hike to pay for the drug. Pfizer then referred such beneficiaries to PAN, according to DOJ.

    DOJ said the alleged scheme, which occurred from 2012 to 2016, boosted Pfizer's revenue and violated the federal False Claims Act, which prohibits drugmakers from giving anything of value to Medicare beneficiaries in an effort to get beneficiaries to use their drugs.

    According to Reuters, the charges resulted from an industry-wide investigation led by the office of U.S. Attorney Andrew Lelling, which examined pharmaceutical companies' support of patient assistance charities.

    Settlement details

    In addition to paying $23.85 million to settle the claims, Pfizer under the settlement entered into a five-year corporate integrity agreement with HHS' Office of Inspector General. Among other things, the agreement requires Pfizer to:

    • Be reviewed by an independent review organization;
    • Implement measures to ensure that future arrangements and interactions with patient assistance programs comply with the law; and
    • Implement a risk assessment and mitigation process.


    Chad Readler, acting assistant attorney general of DOJ's civil division, said, "Kickbacks undermine the independence of physician and patient decision-making, and raise health care costs." He added that the "makes clear" that DOJ "will hold accountable drug companies that pay illegal kickbacks—whether directly or indirectly—to undermine taxpayer funded healthcare programs, including Medicare."

    Lelling said, "Pfizer knew that [PAN] was using Pfizer's money to cover the copays of patients taking Pfizer drugs, thus generating more revenue for Pfizer and masking the effect of Pfizer's price increases." He said federal anti-kickback laws "exis[t] to protect Medicare, and the taxpayers who fund it, from schemes like these."

    Pfizer in a statement said the settlement does not include an admission of liability. The company said it decided to settle the claims out of a "desire to put this legal matter behind it and focus on the needs of patients." The company added, "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."

    PAN President and CEO Daniel Klein said, "While PAN has received contributions from Pfizer, we endeavor to operate our patient assistance programs independent of any influence by donors," he said, adding, "Without the assistance PAN provides, many thousands of underinsured patients would be unable to afford their critical medications" (Stempel, Reuters, 5/24; DOJ release, 5/24; Sagonowsky, FiercePharma, 5/24; Lupkin, Kaiser Health News, 5/24).

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