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Court Rejects Pfizer’s Attempt to Gut HHS-OIG Guidance on Co-Pay Assistance

In a 32-page decision issued late yesterday, Southern District of New York Judge Mary Kay Vyskocil granted summary judgment for the government in a case where pharmaceutical giant Pfizer challenged an HHS-OIG Advisory Opinion finding that Pfizer could violate the anti-kickback statute (AKS) if it went ahead with a proposal to provide co-pay assistance for an expensive drug covered by Medicare Part D. Under Pfizer’s proposal, it would have covered Part D co-pays for Tafamidis, a transthyretin amyloid cardiomyopathy drug that Pfizer priced at $225,000 per year. Annual Part D co-pays for the drug are about $13,000, and Pfizer wanted to cover them so that the high price Pfizer set for the drug would not disincentivize patients from taking the drug. The court agreed with HHS-OIG that this proposal would undermine the Part D co-pay structure — which imposes cost-sharing in part so that pharmaceutical manufacturers have to consider patient costs when pricing their drugs — and could violate the AKS.

The decision includes two findings that will be of particular importance to the government and whistleblowers litigating other AKS cases.

First, the court applied a broad construction to the word “remuneration” in the AKS, and rejected Pfizer’s contention that the payment of remuneration can violate the AKS only if there is “corrupt intent.” The court held that the “word ‘remuneration’ should not be limited to reach only those instances that include corrupt acts,” and that “‘corrupt intent’ is not necessary for liability under the AKS.”

Second, the court held that the government need not show a “quid pro quo” agreement to prove inducement under the AKS. “The plain meaning of the word ‘inducement’ implies a ‘one-way’ transaction, where the requestor simply gets someone to take an action. In other words, the AKS requires only that payments are made with an intent to influence a decision about medical care or purchases, and does not require any further proof of intent or purpose.” (Citations omitted.)

It is unclear why Pfizer brought this case. As the court noted elsewhere in the decision in rejecting one of Pfizer’s jurisdictional arguments, “This is not a close case.” The government and whistleblowers, however, now have excellent new precedent on two key AKS issues.