Pfizer Inc. used a “purportedly independent” charity to help it sharply raise the price of a heart drug, shielding patients from the increase while Medicare picked up the higher costs, the U.S. Justice Department said Thursday in a civil settlement announcement.
Pfizer will pay about $24 million in the anti-kickback settlement, the government said in a statement. It’s the latest agreement in a long-running U.S. investigation into drug maker ties to patient charities. Pfizer will also enter into a five-year monitoring agreement with the Department of Health and Human Services Office of Inspector General.
For drug makers, the charities have been a way to help patients with out-of-pocket costs imposed by insurers and government programs. Without them, drug makers argue, patients might skip doses or avoid treatment altogether because of the expense.
Over the last two years, the government has been issuing subpoenas and investigating the relationships between drug companies and the charities, which are supposed to operate independently from their industry donors. Medicare bars direct subsidies of products by drug makers as kickbacks.
The Pfizer settlement is focused on three drugs: Sutent and Inlyta for kidney cancer, and the heart-rhythm drug Tikosyn. Sutent had U.S. sales of $374 million last year, while Inlyta sold $126 million. Tikosyn sold $153 million in 2016, according to the company.
In the case of the heart rhythm drug, Pfizer worked with the Patient Access Network Foundation to finance a fund for heart patients at the same time it was taking a huge price increase. The drug maker raised the price of Tikosyn — by 44% during the last three months of 2015, according to the government.
“Pfizer coordinated the timing of the opening of the fund for these patients with the implementation of a Tikosyn price increase,” the government said. For the next nine months, patients on the drug accounted for virtually all the beneficiaries of the charitable fund, the Justice Department said.
In 2015, Pfizer gave more than $10 million to the Patient Access Network Foundation, according to a summary by the drug maker. It doesn’t specify how much of that went to the heart drug fund.
In the case of the kidney cancer drugs, the New York-based drug maker worked with a third-party pharmacy company to steer patients to the foundation for financial help, instead of giving out free drug. It tracked data from the pharmacy to confirm that some that Pfizer’s donations were going to patients on its products, according to the Justice Department.
The settlement doesn’t mention price increases for the cancer drugs, which can cost tens of thousands of dollars a year. Inlyta currently costs about $239 per 5-milligram tablet, or more $14,000 a month, according to data compiled by Bloomberg Intelligence. Sutent costs more than $600 for a 50-milligram capsule, or more than $17,000 for a six-week treatment cycle that includes four weeks on the drug and two off.
Pfizer said the settlement isn’t an admission of liability. None of the company’s executives were charged or fined.
“This resolution reflects the company’s desire to put this legal matter behind it and focus on the needs of patients,” Pfizer said in a statement.
The Patient Access Network Foundation said it wasn’t aware of the settlement ahead of time.
“We endeavor to operate our patient assistance programs independent of any influence by donors,” the group said in an emailed statement. “Without the assistance PAN provides, many thousands of underinsured patients would be unable to afford their critical medications.”
Drawing the Line
While drug makers are allowed to directly help patients who have private insurance, such as by giving them coupons to cover their copays, they can’t do it for the millions of patients on government-funded Medicare plans.
However, the U.S. does allow drug makers to donate money to independent patient-assistance charities, which are legal so long as pharmaceutical companies don’t exert influence over how the charities are run or who they help.
Those lines have sometimes become blurred. A Bloomberg Businessweek investigation in 2016 found that one charity in some cases appeared to give preferential treatment to patients of donor companies.
In December, the Justice Department announced a $210 million settlement with United Therapeutics Corp., a maker of pulmonary hypertension drugs, for using a charity to funnel money to its own patients. The company tracked its donations to ensure that sales from Medicare patients being helped “far exceeded” its donations, the government alleged.
Separately, Celgene Corp. and Aegerion Pharmaceuticals reached settlements with federal and state officials in 2017.
Earlier this month, Jazz Pharmaceuticals PLC, the maker of the drug Xyrem, said it had reached a tentative agreement with the Justice Department to settle a probe over its donations to charities and set aside $57 million to resolve the probe.
— Read also, on ThinkAdvisor:
- High-Deductible Plans Are Holding Down Health Spending: Government Actuaries
- 3 New Reasons for Hope About Health Benefits Costs
- A Medicare Benefits Update Could Cut Medigap Sales: GAO