Plaintiff-appellant Pfizer, Inc. brought this action in the United States District Court for the Southern District of New York under the Administrative Procedure Act, 5 U.S.C. §706(2), challenging an advisory opinion issued by the United States Department of Health and Human Services Office of Inspector General (“HHS OIG”). Pfizer produces and sells a drug called tafamidis that treats a rare, progressive heart condition known as transthyretin amyloid cardiomyopathy. To make the expensive treatment more affordable, Pfizer proposed a Direct Copay Assistance Program, through which Pfizer would directly cover the cost of a patient’s co-pay for tafamidis. HHS OIG issued an advisory opinion stating that the Direct Copay Assistance Program would violate the federal Anti-Kickback Statute, 42 U.S.C. §1320a-7b(b)(2)(B). The district court (Mary K. Vyskocil, J.) granted summary judgment to defendants, rejecting Pfizer’s argument that liability under the Anti-Kickback Statute requires an element of “corrupt” intent. We agree with the district court that the agency’s interpretation of the Anti-Kickback Statute is not contrary to law. We therefore ROBERT SACK, C.J. AFFIRM the judgment of the district court. Pfizer, Inc. produces and sells a drug called tafamidis, which treats a rare, progressive heart condition known as transthyretin amyloid cardiomyopathy (“ATTR-CM”). Tafamidis is considered a breakthrough treatment — it is currently the only drug approved by the United States Food and Drug Administration (“FDA”) to treat ATTR-CM. It also carries an extremely high price tag: $225,000 per year. Because ATTR-CM disproportionately affects older Americans, most ATTR-CM patients are covered by Medicare. Under Medicare’s pricing formula, patients who use tafamidis are responsible for a co-pay of about $13,000 per year. Concerned that many patients cannot afford this price, Pfizer proposed a program, called the Direct Copay Assistance Program (the “Direct Program”), which would directly cover a patient’s co-pay if the patient met specified eligibility criteria. Pfizer sought an advisory opinion from the United States Department of Health and Human Services Office of Inspector General (“HHS OIG”) to ensure that its proposal did not run afoul of federal laws. HHS OIG ultimately issued an unfavorable advisory opinion, concluding that the Direct Program would violate the federal Anti-Kickback Statute (“AKS”), 42 U.S.C. §1320a-7b(b)(2)(B), if implemented with the intent specified in the statute. Pfizer then brought this action in the United States District Court for the Southern District of New York under the Administrative Procedure Act (“APA”), 5 U.S.C. §706(2), challenging the agency’s interpretation of the AKS as contrary to law. Following cross-motions for summary judgment, the district court (Mary K. Vyskocil, Judge) granted summary judgment to the government on the APA claim. Pfizer, Inc. v. U.S. Dep’t of Health & Human Servs., No. 1:20-cv-4920, 2021 WL 4523676 (S.D.N.Y. Sept. 30, 2021). The court rejected Pfizer’s narrower reading of the AKS, which would require an element of “corrupt” intent to impose liability. The district court concluded that the agency’s interpretation was not contrary to law. For the reasons set forth below, we AFFIRM the judgment of the district court. BACKGROUND Factual Background The following facts, which are substantially undisputed by the parties, are drawn from Pfizer’s complaint and the administrative record before HHS OIG. A. Pfizer’s Drug ATTR-CM is a rare cardiac condition characterized by deposits of amyloid protein in the heart muscle, “causing the heart to stiffen and thereby limiting its ability to pump blood to the body.” Compl. 3, at A.12. ATTR-CM patients “experience a progressive decline in function, beginning with fatigue and shortness of breath and ending with potential heart failure, inability to perform even the most basic daily activities, and eventually death.” Id. Without treatment, patients have a median life expectancy of two to three-and-a-half years after diagnosis. An estimated 100,000 to 150,000 Americans, most of whom are elderly, suffer from the condition. Through nearly two decades of research and testing, Pfizer developed a treatment for ATTR-CM called tafamidis, which it sells under the brand names Vyndaqel and Vyndamax. Tafamidis is not a cure, but it slows the decline in quality of life, reduces hospitalization rates, and typically helps patients live longer. In May 2019, the FDA approved tafamidis for the treatment of ATTR-CM, making it the first, and currently the only, FDA-approved pharmacological treatment for the disease. Other treatments exist, but they are “off-label,” i.e., not approved by the FDA to treat ATTR-CM. Some patients may also have non-pharmacological options, such as an organ transplant. Pfizer charges $225,000 for a one-year course of tafamidis. According to Pfizer, the price of the drug reflects its “strong efficacy and safety profile, its slowing of the decline in functional status and quality of life, and the relatively small population of patients with ATTR-CM.” Compl. 5, at A.13. The FDA designated tafamidis as an “orphan drug,” which is a special classification that offers financial incentives, including potential market exclusivity, for the development of treatments for rare disease. Pfizer asserts that such drugs have nonetheless become increasingly expensive for pharmaceutical companies to develop. Id. 32, at A.21. Pfizer also contends that the “off-label” options for treating ATTR-CM are more expensive than tafamidis, as is a heart or liver transplant. Id. 5, at A.13; A.79-80. HHS, on the other hand, cites a 2020 study concluding that tafamidis is “the most expensive cardiovascular drug ever launched in the United States.”1 B. The Direct Copay Assistance Program Because ATTR-CM disproportionately affects older persons, most ATTR-CM patients are beneficiaries of Medicare.2 Almost all Medicare plans provide coverage for tafamidis, but under Medicare Part D — which covers outpatient prescription drugs — beneficiaries remain responsible for certain specified deductibles and co-pays. As relevant to this case, Part D beneficiaries are responsible for 100 percent of an initial deductible, which in 2020 was $435. After satisfying that deductible, beneficiaries enter various coverage phases, where they are responsible for a 25 percent coinsurance payment until they reach the “catastrophic coverage” threshold. Upon reaching “catastrophic coverage,” which in 2020 was $2,652 out-of-pocket (including the prior deductible and coinsurance payments), beneficiaries continue to pay 5 percent of the cost for brand-name medications. There is no upper limit on that 5 percent contribution. From the government’s perspective, as explained by HHS OIG, this cost-sharing structure “expos[es] [Medicare] beneficiaries to the economic effects of drug pricing” and thereby acts as “a market safeguard that Congress included [in Medicare Part D] to protect against inflated drug prices.” OIG Advisory Op. No. 20-05, 17-18 (Dep’t of Health & Human Servs. Sept. 18, 2020), at A.224-25. The government provides a subsidy to assist lower-income Medicare beneficiaries, but only if they fall below 150 percent of the federal poverty level, or an annual income of $19,140. Survey data suggests that, in 2016, approximately 29 percent of Part D participants qualified for this subsidy.3 Under the payment structure outlined above, Medicare beneficiaries who use tafamidis are responsible for a co-pay of approximately $13,000 per year. Pfizer’s concern is that many “middle-income” Medicare patients, who do not otherwise qualify for co-pay assistance options, will be unable to afford that price. Compl. 7, at A.13-14. Even if the company cut the price of tafamidis in half, Pfizer contends, the Medicare co-pay would be approximately $8,000, which remains a significant financial barrier for many patients. Id. 53, at A.28. Pfizer pointed to one study indicating that 49 percent of cancer patients failed to refill their prescriptions when the out-of-pocket costs exceeded $2,000.4 To address this concern, Pfizer proposed the Direct Copay Assistance Program. Through this program, Pfizer would cover almost the entirety of a Medicare beneficiary’s co-pay for tafamidis so long as: (1) the patient was prescribed tafamidis to treat ATTR-CM, (2) the patient is a U.S. resident, and (3) the patient meets program criteria for financial need, which are tailored to address the burden that “middle-income” patients face in acquiring tafamidis. Patients who are eligible for the Direct Program would be responsible for only $35 per month, with Pfizer covering the remainder of the approximately $13,000 annual co-pay. The federal government, through Medicare, would pick up the rest of the $225,000 tab. Pfizer emphasized, both in its submissions to HHS and in its complaint in the district court, that it would not use the Direct Program to solicit new patients for tafamidis — a patient would only become eligible for the Direct Program after a physician prescribes the treatment. Compl. 63, at A.30; A.81. Pfizer also stated that the Direct Program provides no financial incentive to physicians to favor a tafamidis prescription. Compl. 65, at A.31; A.84. C. The Anti-Kickback Statute The statutory scheme at issue is the federal Anti-Kickback Statute, 42 U.S.C. §1320a-7b. Congress first enacted the AKS in 1972 to combat fraud and abuse in connection with Medicare and Medicaid. The AKS prohibits, in relevant part, “knowingly and willfully offer[ing] or pay[ing] any remuneration” to “induce” an individual to purchase a federally reimbursable healthcare product. Id. §1320a-7b(b)(2)(B). Liability under the AKS includes both civil and criminal penalties, including the possibility of a pharmaceutical company’s complete exclusion from federal reimbursement for its drugs. See id. §1320a-7(b)(7). At least in part because the sanctions under the AKS are severe, Congress created a process by which parties may seek advisory opinions from HHS OIG as to whether a proposed course of action would violate the AKS. Id. §1320a-7d(b). Advisory opinions are binding on both the government and the requesting parties, unless set aside by a reviewing court. Id. §1320a-7d(b)(4). Procedural History A. HHS OIG Advisory Opinion On June 27, 2019, Pfizer submitted a request to HHS OIG for an advisory opinion on the legality of the Direct Program. On December 9, 2019, HHS OIG informed Pfizer that it had reached an unfavorable opinion and would issue an advisory opinion to that effect if Pfizer did not voluntarily withdraw the request. In response, Pfizer sought further consultation with the agency to explain “why there was little risk of fraud or abuse” with the Direct Program, and how the program would be limited to patients who “had been prescribed tafamidis by their physician[] and were only unable to access their medication due to financial need.” Compl.
