16 BARRON’S October 12, 2020
launch of tafamidis—sold by Pfizer
(ticker: PFE) under the names
Vyndaqel and Vyndamax—a $225,000-
a-year treatment for a potentially fatal
heart condition. The price, which
makes tafamidis the most expensive
cardiovascular drug ever launched in
the U.S., is “unconscionable” and “com-
pletely unjustified,” Feigenson said in
an interview with Barron’s.
As a retired entrepreneur living
on Social Security income of about
$26,000 a year, Feigenson has his
prescription covered through Medi-
care and funding from independent
charities, filling in the gaps with free
drugs he gets through a Pfizer pro-
gram for lower-income patients. “I’m
in a race to see if I can bankrupt Medi-
care faster than anybody else,” he
says. “I’m not cheap.”
If Pfizer has its way, taxpayers
could soon be on the hook for many
more doses of tafamidis. In June, the
Pfizer Lawsuit Could Be an
‘Earthquake’ for Drug Pricing
The drugmaker is seeking a judgment in favor of patient-assistance programs that would allow it to help cover
Medicare patients’ copays for tafamidis—the most expensive cardiovascular drug ever launched in the U.S.
L
ast year, Pfizer posted a
billboard outside its mid-
town Manhattan headquar-
ters showing a larger-than-
life patient smiling at his
partner. “Dedicated to the
brave of heart,” it read.
The patient, Walter Feigenson, 72,
of Portland, Ore., says he was paid
roughly $1,000 for taking part in the
By ELEANOR LAISE
pharmaceutical giant filed a lawsuit
against the federal government in U.S.
District Court for the Southern Dis-
trict of New York, seeking a judgment
in favor of proposed patient-assistance
programs that would allow the com-
pany to help cover tafamidis copays
for many Medicare beneficiaries.
Such programs, which can be spon-
sored directly by drug companies or
independent charities funded largely
by the pharmaceutical industry, often
cover much or all of patients’ out-of-
pocket drug costs, leaving third-party
payers such as insurers and Medicare
to pick up most of the tab.
The case could reverberate far be-
yond Pfizer and patients prescribed
tafamidis. Patient-assistance programs
covering out-of-pocket costs remove a
powerful market force—patients’ price
sensitivity—that would otherwise
push down drug prices, and drugmak-
ers can use them to boost sales of
Illustration byCHRIS GASH
“Tafamidis
is a canary
in the coal
mine” that
will help
determine
the future
pricing of
similar
drugs.
Dr. Dhruv Kazi
October 12, 2020 BARRON’S 17
pricey medications, researchers say. A
ruling for Pfizer “would be a major
earthquake” that could send drug
prices soaring, with taxpayers footing
much of the bill, says Ge Bai, an asso-
ciate professor at Johns Hopkins Carey
Business School and the Bloomberg
School of Public Health, who has stud-
ied patient-assistance programs.
Pfizer’s lawsuit takes aim at federal
policies that prohibit drugmakers from
providing direct copay assistance to
Medicare beneficiaries and restrict
their funding of and communications
with independent patient-assistance
charities. Companies straying outside
those policies risk violating federal
anti-kickback laws, which prohibit
them from offering anything of value to
induce Medicare patients to purchase
the company’s drugs.
Over the past few years, the Depart-
ment of Justice has collected more
than $1 billion in settlements from
pharmaceutical companies, including
Pfizer itself, that allegedly violated
these prohibitions. A Pfizer victory in
the tafamidis case could stymie such
enforcement efforts, says Max Vold-
man, an attorney at Constantine Can-
non who specializes in health-care
industry fraud. A decision in the case
could come early next year.
Pfizer and several other drugmak-
ers involved in the settlements have
said that their charitable giving helps
people lead healthier lives and that
all patients deserve access to their
prescriptions.
The fact that Pfizer can’t offer the
same type of support to Medicare
patients that it provides to the com-
mercially insured is a “fundamental
inequity,” says Suneet Varma, global
president of Pfizer’s rare-disease
unit. “That’s what brought us to this
point.” As for tafamidis’ price, he
says it’s “responsible, because of the
transformational value this delivers
for patients and the size of the rare-
disease population it treats.”
The legal battle is playing out as
President Donald Trump and law-
makers of both parties look for ways
to rein in Medicare Part D drug
spending, which grew nearly 10%
annually from 2009 to 2018, reaching
$168 billion, according to the Medi-
care Payment Advisory Commission.
“Tafamidis is a canary in the coal
mine” that will help determine the
future pricing of similar drugs, says
Dr. Dhruv Kazi, a cardiologist and
health economist at Beth Israel
Deaconess Medical Center in Boston.
His research has found that treating
all patients eligible for tafamidis—
estimated at 120,000 people—would
boost total annual U.S. prescription-
drug spending by 9%, or $32 billion. If
there’s one thing we’ve learned from
the pandemic, he says, it’s that “even
in wealthy countries like the U.S., ulti-
mately health-care resources are lim-
ited, and we have to decide what to opt
in to and what to forgo.”
Many Medicare patients who are
prescribed high-cost drugs know all
about those unpleasant trade-offs,
because Part D places no cap on their
out-of-pocket spending. Even when
they reach catastrophic coverage,
they’re responsible for 5% of the drug
costs, which is often unaffordable.
Independent patient-assistance
charities have stepped into the breach,
growing rapidly in the years after Part
D took effect in 2006. These nonprofit
organizations can take cash donations
from drugmakers and use them to
help cover Medicare patients’ copays
and other out-of-pocket costs, so long
as they’re following guidelines issued
by the Department of Health and Hu-
man Services’ Office of Inspector Gen-
eral that are meant to ensure their
independence. Drugmakers aren’t
supposed to exert any control over the
charities, for example, or receive data
that can correlate their donations with
sales of their own drugs.
From 2006-15, total giving by ma-
jor independent charities such as the
Patient Access Network Foundation
and HealthWell Foundation climbed
more than 750%, to $1.4 billion, ac-
cording to research by the U.S. Trea-
sury’s Office of Tax Analysis. Since
then, several charities settled Depart-
ment of Justice allegations that they
helped drug companies steer dona-
tions to patients taking their own
drugs. Even so, five major patient-
assistance charities gave a total of
more than $1.1 billion to assist patients
in 2018, according to Internal Revenue
Service filings.
The programs help drive up drug
prices and boost drugmakers’ profits,
critics say. The median annual cost of
drugs covered by the programs is
$1,157, compared with $367 for drugs
not covered, and off-patent brand-
name drugs are more likely to be cov-
ered than their generic equivalents,
according to a 2019 study by Bai and
others who examined 274 disease-
specific programs offered by the major
independent charities.
A drugmaker’s $1 million donation
to a charity that helps Medicare pa-
tients access high-price drugs “has the
potential to generate up to $21 million
for the sponsor company, funded by
the U.S. government,” according to a
2017 Citigroup report. Drugmakers
also get tax deductions for their con-
tributions to the charities.
The charities tend to ignore pa-
tients who may most need their help,
researchers say. The uninsured are
excluded from eligibility in 97% of
the programs, Bai’s study found, en-
suring that their biggest donors—the
drugmakers—get paid for each pre-
scription the charities help cover.
Uninsured patients may be eligible to
receive free drugs directly from drug-
makers, says Krista Zodet, president
of the HealthWell Foundation. “One
of the main reasons that foundations
like us are in place is that we can
help Medicare patients” in ways that
drug companies can’t, she says.
Tafamidis is the only Food & Drug
Administration–approved treatment
for transthyretin amyloid cardiomyo-
pathy, or ATTR-CM, which causes the
heart to stiffen and limits its ability to
pump blood. Even before Pfizer filed
its lawsuit, some doctors involved in
tafamidis clinical trials took the un-
usual step of publicly criticizing its
$225,000 price tag. Early this year, a
JAMA Cardiology article co-written
by a principal investigator in a
tafamidis clinical trial called the drug
a “particularly egregious example of
price gouging.”
To determine tafamidis’ price, says
Pfizer’s Varma, the company first
considered the drug’s clinical value,
which includes prolonging life and
reducing hospitalizations.
But some doctors and researchers
Treating
all 120,
patients
eligible for
tafamidis
would boost
annual U.S.
prescription-
drug
spending
by 9%, or
$32 billion,
according to
one study.
WHO’S FOOTING THE BILL?IfPfizerhasitsway,taxpayerscouldsoonbeonthe
hookformanymoredosesofitshearttreatmentsVyndaqelandVyndamax.
2018 Q
$0 Mil 100 200 300
Q
Q
2019 Q
Q
Q
Q
2020 Q
Q
Less than
$7,
$7,200-
$10,
$10,000-
$30,
More than
$30,
Sources: Company reports; “Financial Eligibility Criteria and Medication Coverage for Independent Charity Patient Assistance Programs,” So-YeonKangetal.,JournaloftheAmericanMedical
Association, 2019Pfizer’s global revenue from Vyndaqel and Vyndamax has surged
since tafamidis received FDA approval for treatment of a
debilitating heart disease in May 2019.
DrugswithhigheraverageannualMedicarePartDspending
per beneficiary are more likely to be covered by an independent
patient-assistance charity.
36 %
52 %
73 %
83 %