Pfizer loses legal battle with big implications for drug pricing

A federal court has dismissed Pfizer’s -0.24% PFE claims against the government in a case with a significant impact on drug prices.

The pharmaceutical giant’s lawsuit filed last year against the U.S. Department of Health sought the green light for proposed programs that would help cover co-payments for Medicare patients who have prescribed the cardiovascular drug tafamidis, which Pfizer is using Prescribes $ 225,000 a year.

In an opinion released Thursday, Judge Mary Kay Vyskocil of the U.S. District Court for the Southern District of New York denied Pfizer’s motion to rule that the proposed programs would not violate anti-kickback laws.

Federal anti-kickback laws generally prevent drug companies from offering anything of value to get Medicare patients to take their medication. Pfizer’s lawsuit was a challenge to federal policy prohibiting drug manufacturers from providing direct co-payment assistance to Medicare beneficiaries and limiting their ability to provide that assistance through independent charities.

A verdict in favor of Pfizer would have driven up drug prices and Medicare spending, experts say. Copays in Medicares Part D prescription drug benefit “are one of the very few restrictions on drug pricing in the United States,” and the decision leaves that restriction, said Gregg Shapiro, partner at whistleblower law firm Newman & Shapiro and former US assistant attorney in Boston.

By and large, the ruling is “bad news for drug company revenues, but good news for overall drug spending,” said Ge Bai, a professor of accounting and health policy at Johns Hopkins University who studied patient support programs.

Pfizer said in a statement that it was disappointed with the ruling and believed that co-payment assistance for Medicare patients prescribed tafamidis was “a fair way to reduce the cost of this breakthrough treatment.”

Pfizer’s worldwide sales of tafamidis, sold as Vyndaqel and Vyndamax, were $ 953 million for the first six months of this year, an operating increase of 82% over the same period last year.

The verdict comes as Congress is considering giving the federal government the power to negotiate drug prices in Medicare, cap part D cost of ownership, and other drug price reforms. The Pfizer case underscores the importance of finding the right balance between policy options, experts say: Without other meaningful reforms, capping own costs could drive drug prices higher.

The court rejected Pfizer’s argument that violating the anti-kickback law must be for corrupt or improper purpose. The law “means what it says,” wrote Judge Vyskocil in the statement. “It prohibits the knowledgeable and willful granting of remuneration that is intended to induce the purchase of medical treatments or services.”

The decision means government enforcement of anti-kickback laws is “full speed ahead,” said Max Voldman, a health fraud attorney at Constantine Cannon. The Justice Department has raised more than $ 1 billion in settlements in recent years from pharmaceutical companies that allegedly channeled kickbacks through third-party foundations.

The court also denied Pfizer’s motion to evict an opinion from the Inspector General for Health and Welfare, which found that the drugmaker’s proposed direct co-payment support program could violate the anti-kickback statute and “pose more than a minimal risk of fraud and abuse” represent.

However, the wording of the statement may encourage drug manufacturers who wish to challenge unfavorable advisory opinions in the future, said Jennifer Michael, partner at Bass, Berry & Sims and former head of industry consulting in the Office of Counsel to the HHS inspector general. Michael pointed to the report’s statement that “formal deference” to the Inspector General’s report or other HHS guidelines “is not appropriate here”.

The court also recognized the potential consequences of its ruling, saying that “economic hardship can result in patients with a debilitating disease foregoing treatment that might otherwise help them.”

The HHS inspector general’s office declined to comment on the decision.