June 10, 2021

Manufacturer Co-Pay Support: Proper or Prohibited?

Pfizer Asks Court to Allow Direct Assistance to Medicare Patients

August 2, 2021—For decades, it has been the Office of Inspector General’s position that a manufacturer would run afoul of federal law if it were to provide direct copay assistance to beneficiaries of federal healthcare programs. Pfizer is challenging that stance.

The manufacturer brought suit last year alleging that the long-standing prohibition is unconstitutional. Now, a federal judge in the Southern District of New York is squarely considering the question.

The core legal issue is whether the availability of a manufacturer copay program improperly skews a patient’s decision-making. The company contends that it should be able to provide financial support to patients taking its products—without violating the federal Anti-Kickback Statute (AKS).

The government argues that a direct manufacturer saving program effectively functions as a patient bribe in violation of the AKS. A ruling in the company’s favor could open a path for manufacturers to offset patient out-of-pocket costs directly for more than 100 million Americans.

The AKS dispute turns largely on statutory construction. But the District Court is also sorting through a series of interrelated questions with respect to the Declaratory Judgement Act and the Administrative Procedures Act.

Setting aside the banal legal analysis, the underlying public policy questions are compelling given the fact of the case. There is no FDA-approved alternative for the products in question. They are 2 orphan drugs that, according to FDA, treat a rare, debilitating and often fatal disease. The estimated annual price for the therapies is $225,000 per patient.

Procedurally, the suit arises out of a series of discussions between the parties that stem from the company’s request for an Advisory Opinion on the permissibility of providing a direct copay program and/or one set-up through its own foundation. Pfizer has asked the court to declare that its proposed programs do not violate the AKS and to set aside OIG’s determination on the programs’ permissibility.

Oral arguments took place last month. The judge’s ruling on the parties’ motions for dismissal and summary judgement as to various claims is forthcoming.

Questions about operating a manufacturer saving program? Contact Razor Legal Solutions. We’ve got experience structuring dozens of them, including negotiating OIG Advisory Opinions.

This alert provides information as a service to clients and other friends of the firm for educational purposes only. It should not be construed or relied upon as legal advice, and it does not create an attorney-client relationship. © 2021 Razor Legal Solutions. All rights reserved.