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Pfizer Sues Over Medicare Practices

Pfizer sues over Medicare Practices text over image of Pfizer logo

Posted on August 18, 2021 by Kyle Walton

Why is Pfizer suing Uncle Sam?

Since the FDA first allowed limited pharmaceutical television ads in the 1980s, aggressive marketing practices and increased political influence on the part of drug manufacturing companies has continued to be a hot-button issue.

In fact, three years ago, Pfizer settled out of court over allegations that the pharma giant was paying kickbacks and inflating sales by reimbursing Medicare patients for out-of-pocket drug costs.

Now, Pfizer has headed to the courts once again in an attempt to formally legalize the same practice they paid $24 million in settlement costs over just a few short years ago.

In Pfizer’s case, this could be done by appointing an outside administrator who would use Pfizer contributions to cover Medicare copays, deductibles and coinsurance for those drugs, which otherwise would cost patients about $13,000 a year.

Why is this lawsuit a point of concern for the little guy?

Letting pharmaceutical companies put money directly into patients’ pockets to pay for their own expensive medicines “does induce people to get a specific product” instead of shopping for a cheaper or more effective alternative, said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University. “It’s kind of the definition of a kickback.”

Through these “interesting” sales dealings, Pfizer could make expensive medications practically free for Medicare beneficiaries, thereby attracting Medicare patients almost exclusively to their brand of drugs. 

While this may seem like great news to those who regularly rely on prescription medication to treat and manage existing health conditions, the fallout of the situation may actually be much more sinister.

According to the Justice Department, even as Pfizer continued to attract customers by offering essentially free medication, the actual price of just one of these medications soared 44 percent to over $225,000 per year, putting Medicare and Medicaid on the hook for the full cost.

Just a few short years ago, this aggressive marketing tactic landed Pfizer in hot water. Now though, the company is attempting to leverage the courts to legalize this practice, possibly opening the door for not just themselves, but for other Big Pharma companies to follow suit.

If Pfizer succeeds, there is grave concern that the win could end up costing American taxpayers billions of dollars while simultaneously giving pharmaceutical companies even more control, causing drastic increases in drug costs and potentially erasing decades of efforts to regulate the prescription medication market.

“If this is legal for Pfizer, Pfizer will not be the only pharmaceutical company to use this, and there will effectively be a gold rush,” government lawyer Jacob Lillywhite argued earlier this summer.

What is Pfizer’s argument for this legalization?

In recent years, there has been a noticeable trend toward corporate America’s right to free speech, giving way to aggressive marketing tactics and greater political influence. According to legal scholars, some of these practices would have been completely unthinkable for a corporation like Pfizer to attempt just a few short decades ago.

Among other points, Pfizer argues that current regulation violates the company’s right to free speech under the First Amendment. The really surprising part? Pfizer may have a point — at least in the opinion of many judicial professionals. 

“It’s infuriating to realize that, as outlandish as they seem, these types of claims are finding a good deal of traction before many courts,” said Michelle Mello, a professor of law and medicine at Stanford University. “Drug companies are surely aware that the judicial trend has been toward more expansive recognition of commercial speech rights.”

Pfizer’s lawsuit, which is currently working its way through Southern District of New York courthouses, is seeking judge permission to continue its practice of offering reimbursements to patients who are currently using two of its heart-failure medications, each of which costs approximately $225,000 per year.

What are the chances that Pfizer wins its case?

As stated, there has seemingly been a trend toward more business-friendly legal rulings in recent years, especially following the appointment of more than 200 corporate-friendly federal judges by billionaire businessman-turned-president Donald Trump.

Fortunately, precedence seems to dictate that Big Pharma is not often a victor in these types of disputes, as about a dozen drug companies have paid more than $1 billion in legal settlements in cases of potential kickback violations.

Pfizer is one such company, having settled a kickback violations case back in 2017 before denying any admission of wrongdoing and claiming the settlement resulted from the company’s “desire to put this legal matter behind us.”

Still, Pfizer argues that its current proposal, which the Health and Human Services Department has dubbed “highly suspect,” is legal, warranted, and sensible. Only time will tell if this will in fact be the case. A federal judge’s ruling is expected any day now.

For more pharma-related content, especially as it relates to the Medicare cost of prescription medications, check out the news section at MedicareInsurance.com.

About the Author

Kyle Walton

Kyle is a professional writer with several years of experience helping to inform the public on many diverse topics and industries, including healthcare. He is a Kutztown University graduate, Class of 2017.

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