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Pfizer Sues HHS Over Copay Card Restrictions

On Friday, June 26, Pfizer filed a Complaint seeking a Declaratory Judgment in the Southern District of New York against the U.S. Department of Health and Human Services.  The suit alleged that the agency’s incorrect interpretation of two laws, namely the federal Anti-Kickback Statute (“AKS”) and the Beneficiary Inducement Statute (“BIS”), has prevented and continues to prevent many patients from accessing expensive medications, specifically medication manufactured by Pfizer intended to treat certain life-threatening heart conditions.

Background

The Office of the Inspector General (“OIG”) has long adopted the view that the AKS and the BIS “categorically prohibit pharmaceutical manufacturers from providing direct copay assistance to Medicare patients (and other federal health care beneficiaries), irrespective of whether such assistance would provide access to critically needed medications, rather than improperly corrupt medical decision-making.” The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. See 42 U.S.C. 1320a–7b. The BIS bars the offering of remuneration to Medicare or Medicaid beneficiaries where the person offering the remuneration knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services from a particular provider. See Social Security Act, 1128A(a)(5). Most copay cards include a disclaimer that indicates that individuals are ineligible if prescriptions are paid for by any state or other federally funded programs, including, but not limited to, Medicare Part B, Medicare Part D, Medicaid, Medigap, Department of Veterans Affairs or TRICARE.

Pfizer’s Suit

In its suit, Pfizer alleges that the OIG’s guidance, in addition to improperly restricting the use of copay assistance, also improperly restricts the interactions drug manufacturers may have with independent charity programs that benefit Medicare patients. According to the Complaint, “the OIG guidance imposes severe restrictions on a pharmaceutical manufacturer’s communications with and donations to independent charities that impede the manufacturer’s ability to bestow a meaningful and effective gift by, for example, ensuring the charity has sufficient funds to cover all patients who require assistance accessing treatment or medication.” The Complaint further alleges that, in addition to implicating serious constitutional concerns, including infringing Pfizer’s First Amendment rights, the OIG’s interpretation of the AKS and BIS and the restrictions associated with charitable giving, will also have a severe impact on patient care. Pfizer brings these claims pursuant to the Administrative Procedure Act, which allows a person suffering a wrong or adversely affected by an agency action to receive judicial review of the agency’s action. 5 U.S.C § 702. If the court finds that the agency’s action is “not in accordance with law” or “contrary to constitutional right,” the court must set aside the agency’s action. 5 U.S.C. § 706(2)(A) & (B).  

More Litigation?

Due to the importance of manufacturer coupon cards in helping to introduce important medications to the patients most in need of them, it is likely we will see an uptick in litigation surrounding the use of drug manufacturer coupon cards. Frier Levitt has tremendous experience addressing the legal issues surrounding manufacturer coupon cards, including the issues raised in Pfizer’s Complaint. Moreover, Frier Levitt has extensive litigation experience, including litigation related to novel and complex legal claims including the Administrative Procedure Act. Manufacturers are at a clear disadvantage as a result of the OIG’s interpretation of AKS and BIS; however, like Pfizer, other drug manufacturers should consider a variety of options that could usher in a change in the OIG’s position including legal strategies involving the Administrative Procedure Act and other novel legal claims since these strategies and claims may provide legal remedies for manufacturers that are uniquely suited to address this specific issue.

In addition, Frier Levitt has counseled drug manufacturers in connection with the auditing of their manufacturer coupon card programs, which could assist drug manufacturers in ensuring less fraud, waste and abuse.  

How Frier Levitt Can Help

If you are drug manufacturer and have questions regarding your manufacturer coupon programs and the implementation of those programs, contact Frier Levitt today to speak to an attorney.