Pfizer inks $23.8M deal to settle Justice Department's charity kickback probe

Pfizer sign
Pfizer inked a deal worth $23.85 million with U.S. authorities to settle kickback allegations. (Tracy Staton)

Targeted by the Justice Department in an industrywide copay assistance investigation, Pfizer has now agreed to a $23.85 million settlement with the feds. The deal will resolve allegations that its contributions to an assistance fund were kickbacks.

The copay charity probe has made its way to some of biopharma's biggest names, including Johnson & Johnson, Celgene and Biogen. In Pfizer's case, authorities allege the company used charitable contributions to boost its own profits. 

To do so, the feds say, Pfizer used a patient foundation as a "conduit" to pay Medicare patients' copays for its kidney cancer drugs Sutent and Inlyta, along with its arrhythmia drug Tikosyn. 

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The government contends that Pfizer hiked prices on Tikosyn by 40% at the end of 2015, and worked with the foundation to create a fund that would help patients afford copays at the new price. The drugmaker then referred patients to the fund, according to authorities.

In a statement, FBI special agent in charge Harold Shaw said the alleged setup "violates the basic trust patients extend to the healthcare system and threatens the financial integrity of the Medicare program.” Medicare patients are not allowed to participate in copay coupon programs that companies sponsor themselves.

In an emailed statement, Pfizer said the "resolution reflects the company’s desire to put this legal matter behind it and focus on the needs of patients."  

RELATED: Prosecutors rope Pfizer into fast-growing copay assistance probe 

Along with Thursday's settlement, Pfizer has entered a 5-year corporate integrity agreement that requires the drugmaker to implement measures to ensure that its dealings with patient assistance groups are compliant, according to the DOJ. 

Many of the requirements in that agreement were already part of the company's compliance program, Pfizer said. The company said it takes compliance "very seriously" and regularly updates its policies. 

"Donations to independent charitable organizations can provide significant assistance to patients with their copayments for prescriptions, and Pfizer continues to believe these programs help patients lead healthier lives," the company's statement said.

RELATED: IRS investigates patient charity as a possible 'conduit' for Big Pharma sales

Pfizer is far from the only drugmaker to face scrutiny on its copay charity ties. United Therapeutics has already inked a $210 million settlement, and Johnson & Johnson, Astellas, Gilead Sciences, Celgene, Biogen and others face investigations. Celgene also faces a whistleblower suit claiming the company worked to “game the system” with contributions to steer charities toward its drugs. The company denied the charge. 

Aside from industry investigations, the IRS last year started looking into a leading patient assistance charity, formerly known as the Chronic Disease Fund, to see whether the group is acting as a “conduit” for the drug industry to boost sales.