Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Axios on your phone

Get breaking news and scoops on the go with the Axios app.

Download for free.

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Annelise Capossela/Axios

A federal judge will soon determine whether Pfizer can pay Medicare patients' out-of-pocket expenses for one of its heart medications that is priced at $225,000 per year.

Why it matters: A ruling in Pfizer's favor would legalize something that is viewed as a kickback under current law, and would jeopardize taxpayer coffers by spurring a "gold rush" of pharmaceutical companies to cover Medicare copays for expensive drugs.

  • That could include Aduhelm, Biogen's pricey Alzheimer's treatment.

Where things stand: Pfizer sued the federal government last year, arguing rules prohibiting pharmaceutical companies from directly or indirectly funding patients' drug copays were unconstitutional.

  • Pfizer sells Vyndaqel and Vyndamax, which treat a potentially fatal type of heart failure. Because those drugs are priced at $225,000, Medicare patients face out-of-pocket costs of around $13,000 annually.
  • Pfizer argued it should be allowed either to cover those patient costs directly through its own copay assistance program or through a copay program run by a charity that Pfizer funds.

The big picture: The Office of Inspector General has long said most copay programs (and Pfizer's specific proposals) run afoul of federal law because they function like bribes.

  • "Because the federal government can't negotiate [drug prices], the only economic check on the list price is a patient's cost-sharing," Jennifer Michael, a former top OIG lawyer who has worked on copay issues, tells Axios.
  • If pharmaceutical companies cover copays, patients will gravitate toward those companies' drugs, and physicians will prescribe drugs they know are free for their patients — but taxpayers would pick up the bulk of the tab.
  • Pfizer is familiar with these rules. It had to pay $24 million in 2018 to settle allegations it funneled money to a charity as a way to cover Medicare copays for its drugs.

Zoom in: Oral arguments took place last month and showcased how contentious this legal battle is (read the transcript).

  • "Pfizer is asking the court to do something that's unprecedented, to upend decades of settled law and agency guidance in this highly regulated space and bless their program to induce ... Medicare beneficiaries to purchase what is the most expensive cardiovascular drug ever launched in the United States," federal attorney Jacob Lillywhite said.
  • "What Pfizer has effectively done, and admits this, is priced itself out of the market," Lillywhite said. "It has priced the drug so high that most people who are eligible for that drug cannot purchase it."
  • "As soon as, for the patient and the physician, it appears that the drug is effectively free ... Pfizer is able to price the drug whatever it wants. It could say $225,000 this year, and next year it is going to increase it to $500,000, the next year to $2 million," Lillywhite said.
  • Pfizer's lawyers argued the copay program should be allowed in part because "there is no other FDA-approved drug for this condition." After the judge asked if the copay program would still be legal if another drug treating the disease were approved tomorrow, Doug Hallward-Driemeier, an attorney representing Pfizer, said it "would not protect Pfizer to the same extent."

The bottom line: "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 until Congress amends the statute," Lillywhite said.

  • Another drug that has a high price tag, no competitors and is mostly for Medicare patients? Aduhelm. Biogen said it is "not planning to comment on this decision."

Go deeper

Jun 18, 2021 - World

Palestinian Authority cancels COVID vaccine agreement with Israel

Palestinian Health Minister Mai al-Kaila administers a dose of the COVID-19 vaccine to a woman during a vaccination campaign in Ramallah on March 21, 2021. Photo: Sababa/Xinhua via Getty

The Palestinian Authority called off the COVID vaccine deal with the new Israeli government after determining the doses were too close to their expiration date, Reuters reports.

The latest: Israel had agreed to transfer 1.2 million doses of Pfizer to the Palestinian Authority in exchange for the fresh Pfizer shipment Palestinians were expected to receive in October. But on Friday Palestinian officials said the doses from Israel were set to expire soon and did not meet the necessary standards.

Updated 32 mins ago - Politics & Policy

Pelosi appoints GOP Rep. Kinzinger to Jan. 6 committee

House Speaker Nancy Pelosi (D-Calif.) announced Sunday that she has appointed Rep. Adam Kinzinger (R-Ill.) to serve on the House select committee investigating the Jan 6. Capitol riot.

Why it matters: Pelosi's announcement comes after she rejected two of the five Republican appointments offered by House Minority Leader Kevin McCarthy (R-Calif.).

Mike Allen, author of AM
1 hour ago - Politics & Policy

America's "Friendscape" crisis

New research shows Americans have fewer friends than in the past, and are less likely to have a best friend.

  • Why it matters: At a time of excruciating mental and societal stress, this is another sign we're breaking apart. And the friendship drought could get worse with more people working remotely or hybrid-ly.

You’ve caught up. Now what?

Sign up for Mike Allen’s daily Axios AM and PM newsletters to get smarter, faster on the news that matters.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!