42 F.4th 67
2d Cir.2022Background
- Pfizer developed tafamidis, the only FDA‑approved drug for transthyretin amyloid cardiomyopathy (ATTR‑CM), priced at about $225,000 per year.
- Most ATTR‑CM patients are Medicare beneficiaries; under Medicare Part D many face roughly $13,000 annual out‑of‑pocket costs for tafamidis.
- Pfizer proposed a Direct Copay Assistance Program to cover most of a beneficiary’s copay for eligible patients (leaving $35/month to the patient).
- HHS OIG issued an advisory opinion concluding the Direct Program would violate the federal Anti‑Kickback Statute (AKS) because it would provide remuneration to induce purchases of a federally reimbursable drug and thus create a high risk of fraud and abuse.
- Pfizer sued under the Administrative Procedure Act challenging the agency’s interpretation of the AKS (arguing AKS requires a corrupt/quid pro quo intent); the district court granted summary judgment to the government and the Second Circuit affirmed.
Issues
| Issue | Pfizer's Argument | HHS/Government's Argument | Held |
|---|---|---|---|
| Whether the AKS requires a "corrupt" intent (quid pro quo or corrupting purpose) to impose liability | AKS requires a corruption element; payments must be intended to corrupt decision‑making | AKS prohibits knowingly and willfully offering remuneration to induce purchases; no separate corruption element required | No corruption element required beyond knowing and willful inducement; agency interpretation stands |
| Meaning of "any remuneration ... to induce" — does "induce" imply corruption | "Induce" connotes improper influence and quid pro quo corrupt intent | "Induce" means to persuade or entice; linguistically neutral as to moral character | "Induce" is neutral persuasion and does not by itself import corruption |
| Effect of parenthetical "(including any kickback, bribe, or rebate)" — limits or illustrates "any remuneration" | Parenthetical narrows "any remuneration" to corrupt forms like kickbacks/bribes | Parenthetical is illustrative; "includes" is typically enlarging, not limiting | Parenthetical provides non‑exhaustive examples; does not limit "any remuneration" to corrupt payments |
| Mens rea: does "willfully" require a corrupt/evil motive beyond knowing violation of law | "Willfully" implies bad purpose or corrupt motive | "Willfully" means intentional violation of a known legal duty, not necessarily corrupt motive | "Willfully" means purposeful violation of a known legal duty; does not add a separate corruption requirement |
Key Cases Cited
- Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (U.S. 2021) (start statutory interpretation with text; plain‑meaning approach)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (U.S. 1984) (framework for judicial deference to agency statutory interpretations where statute is ambiguous)
- United States v. Alfisi, 308 F.3d 144 (2d Cir. 2002) (quid pro quo requirement in bribery context discussed)
- United States v. Zacher, 586 F.2d 912 (2d Cir. 1978) (interpreting pre‑1977 AKS language regarding kickbacks/bribes)
- Burgess v. United States, 553 U.S. 124 (U.S. 2008) (the word "includes" generally signals enlargement, not limitation)
- Bryan v. United States, 524 U.S. 184 (U.S. 1998) (defining "willfully" as intentional violation of a known legal duty)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (U.S. 2016) (false claims can stem from noncompliance with material statutory requirements)