The U.S. Department of Justice announced late last week that it had settled with Pfizer, Inc. (Pfizer) over allegations that the company had constructed a scheme, in conjunction with a third-party pharmacy and the not-for-profit Patient Assistance Network, to provide kickbacks to Medicare patients who took certain medications manufactured by Pfizer. The $23.8 million settlement presents further evidence of U.S. Attorney Andrew Lelling’s determination to keep the pressure on drug makers and patient assistance charities. (See “Massachusetts’ New U.S. Attorney Vows to Continue Pressure on Drug Makers and Patient Assistance Programs” and “Jazz Pharmaceuticals Reveals $57 Million Set Aside in SEC Filing” for additional background.)

In this instance, the government alleged that Pfizer used its relationship with a third-party pharmacy and the Patient Assistance Network to cover the copay obligations of Medicare patients taking three Pfizer drugs: Sutent and Inlyta, which both treat renal cell carcinoma, and Tikosyn, used in the treatment of arrhythmia in patients with atrial fibrillation or atrial flutter. Pfizer allegedly made donations to the foundation to enable it to cover the copays of these patients in violation of the Anti-Kickback Statute.

“Pfizer used a third party to saddle Medicare with extra costs,” said United States Attorney Andrew E. Lelling. “According to the allegations in today’s settlement agreement, Pfizer 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 Pfizer’s price increases. The Anti-Kickback Statute exists to protect Medicare, and the taxpayers who fund it, from schemes like these.”

In addition to the $23.8 million-dollar settlement, Pfizer also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires that Pfizer implement measures designed to ensure that arrangements and interactions with third-party patient assistance programs are compliant with the law, that the company undergo reviews by an independent review organization, acquire compliance-related certifications from company executives and Board members, and implement a risk assessment and mitigation process. The CIA runs for a five-year period.