The US Department of Justice (DOJ) said Thursday that Pfizer has agreed to pay nearly $24 million to settle claims that it violated federal regulations by improperly using a charitable foundation to cover Medicare patients' out-of-pocket expenses for its prescription drugs. "Pfizer used a third party to saddle Medicare with extra costs," remarked US Attorney Andrew Lelling, adding the company "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 [its] price increases."
According to federal prosecutors, Pfizer "used a foundation as a conduit" to pay the co-pay obligations of Medicare patients taking the company's kidney cancer drugs Sutent (sunitinib) and Inlyta (axitinib), as well as its arrhythmia treatment Tikosyn (dofetilide). Sutent and Inlyta generated US sales of $374 million and $126 million last year, while Tikosyn sold $153 million in 2016, according to the company.
In regards to Tikosyn, the DOJ noted that Pfizer had raised the wholesale acquisition cost of the drug by 44 percent in the last three months of 2015. The government claimed that Pfizer then coordinated with the foundation on opening a fund that covered Medicare co-payments with price hikes on the treatment. "For the next nine months, Tikosyn patients accounted for virtually all of the beneficiaries whose co-payments were paid by the fund," the DOJ stated.
The government also argued that rather than provide Sutent and Inlyta to Medicare patients who met the financial qualifications of Pfizer's existing free drug programme, the company "used a third-party specialty pharmacy to transition certain patients to the foundation, which covered the patients' Medicare co-pays." Further, prosecutors alleged that Pfizer donated to the foundation to enable it to cover the co-pays and also "received confirmation" from the foundation, via the specialty pharmacy, that it had funded the payments.
Commenting on the news, Pfizer stated that while it agreed to settle in order to "put this legal matter behind [us] and focus on the needs of patients," the move does not constitute "an admission of facts nor liability." The company added that it continues to donate to charity patient-assistance programmes, saying "donations to independent charitable organisations can provide significant assistance to patients with their co-payments for prescriptions, and [we continue] to believe these programmes help patients lead healthier lives."
Late last year, the DOJ announced a $210-million settlement with United Therapeutics for using a charity as a conduit to illegally cover Medicare patients' out-of-pocket drug costs, while US federal prosecutors launched a probe into Astellas' support of a patient assistance charity that provides financial assistance to Medicare patients. Earlier this month, Jazz Pharmaceuticals said it agreed to pay $57 million to settle a US investigation of its relationships with charities that provide financial support to patients on Medicare.
Meanwhile, a report in June last year said sales of a number of prostate cancer therapies, including Johnson & Johnson's Zytiga (abiraterone) and Pfizer's Xtandi (enzalutamide), had fallen sharply since the start of a US investigation of charities that provide payment assistance to patients. At least six drugmakers, including Johnson & Johnson and Pfizer, were subpoenaed in the probe, with Sanford C. Bernstein & Co. analyst Ronny Gal saying at the time that drugmakers "got scared and stopped funding the cancer-assistance programmes....so instead, they gave the drug for free. When you give patients [a drug] for free, it comes off your sales number."
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