Six former executives of pharmaceutical company Insys Therapeutics Inc. have been arrested and charged in a Massachusetts federal court. They are accused of conspiring to bribe doctors to prescribe the company’s highly potent fentanyl-based pain medication. The six former executives of the Arizona-based Insys include its former chief executive Michael Babich, who resigned from the company in November 2015; its former national sales director Richard Simon; former vice president of sales Alec Burlakoff; former regional sales directors Sunshine Lee and Joseph Rowan; and Michael Gurry, the former vice president of managed markets.

The Defendants are accused of conspiring to bribe pain clinic-based practitioners nationwide to prescribe the medication known as Subsys – which is a powerful narcotic used to treat intense pain in cancer patients – to individuals, including those not diagnosed with cancer, according to the U.S. Department of Justice (DOJ).

Babich is charged with conspiracy to commit racketeering, conspiracy to commit wire and mail fraud and conspiracy to violate the Anti-Kickback Law. Burlakoff, Simon, Lee and Rowan are charged with Racketeer Influenced and Corrupt Organizations (RICO) Act conspiracy, mail fraud conspiracy and conspiracy to violate the Anti-Kickback Law. Gurry is charged with RICO conspiracy and wire fraud conspiracy. Carmen Ortiz, the U.S. Attorney for the District of Massachusetts, said in a statement:

Patient safety is paramount and prescriptions for these highly addictive drugs, especially fentanyl, which is among the most potent and addictive opioids, should be prescribed without the influence of corporate money. I hope that today’s charges send a clear message that we will continue to attack the opioid epidemic from all angles, whether it is corporate greed or street level dealing.

According to Justice Department officials, the former executives also conspired to defraud health insurance providers reluctant to approve payment for the drug when prescribed to non-cancer patients by setting up a “reimbursement unit” that obtained prior authorization directly from insurers. The 60-page indictment against the six Defendants alleges that the bribes and kickbacks were mostly disguised as fees the company paid the doctors for marketing events, such as social gatherings at expensive restaurants designated as “speaker program” events.

Insys has been at the center of investigations by the U.S. Department of Health and Human Services and more than 10 state attorneys general over its fentanyl-based painkiller. Several Insys employees have since pled guilty or have been charged by the Justice Department for certain sales techniques, including the kickback scheme disguised as the doctor speaker program.

Former Insys employees who have also been charged in connection with the scheme include Jonathan Roper, a former district manager from New York, and Fernando Serrando, a former sales representative. They were charged in June with one count of conspiracy each to violate the anti-kickback scheme.

In August, Illinois attorney general Lisa Madigan filed suit against Insys, accusing the company of deceptively marketing a spray version of fentanyl to doctors for off-label uses when the drug is intended to be used for cancer patients. The complaint alleged that Insys aggressively targeted doctors who prescribe opioid drugs instead of oncologists treating the cancer patients Subsys is intended for, marketing the medicine for off-label uses like back and neck pain in order to boost profits, even though it is a known gateway drug for heroin.

Subsys was approved by the U.S. Food and Drug Administration (FDA) in January 2012 for pain management in cancer patients who are already receiving, and thus are tolerant to, opioids for their underlying persistent pain. The drug is highly addictive and significantly more powerful than morphine, offering a rapid onset because it is administered under the tongue.

The arrests reflect the highest-level arrests within Insys’ ranks in connection with the alleged kickback conspiracy. Last November, Babich stepped down from the company in the wake of allegations of the fraudulent drug marketing scheme. Justice Department officials allege that the scheme occurred from about June 2012 to around December 2015.

According to the indictment, the six former executives deliberately targeted practitioners at pain clinics and saw an increase in the number of fentanyl spray prescriptions after these alleged bribes took place. Following establishment of the reimbursement unit, the prior authorization rate for prescriptions rose from about 33 percent to 46 percent during the first week of a pilot program and up to 85 percent after the first year it was created, according to the indictment.

The U.S. government is represented by Assistant U.S. Attorneys K. Nathaniel Yeager and Susan M. Poswistilo. The case is United States of America v. Michael L. Babich et al., in U.S. District Court for the District of Massachusetts.


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