Federal prosecutors in Massachusetts have charged Michael Babich, the 40-year-old former CEO of Insys Therapeutics, with conspiracy to commit racketeering amongst other crimes related to the sales of Subsys, a sublingual fentanyl spray intended for cancer patients experiencing severe pain.
Six other former executives - including the company's former national sales director, Richard Simon, former vice president of sales, Alec Burlakoff and two former regional sales directors - were suspected to be involved and were arrested on the same charges, prosecutors said.
Doctors bribed to prescribe the drug off-labelFentanyl is a synthetic opioid that is approximately 100 times more potent than morphine and 40 times more powerful than heroin. The drug has been in the spotlight recently, blamed for contributing to the massive spike in fatal overdoses across the U.S. in recent times.
Doctors are allowed to off-label prescribe - prescribing drugs for conditions not approved by the FDA - but drug makers are not permitted to promote medications for these purposes.
However, under the orders of Babich and other executives, the company allegedly paid hundreds of thousands of dollars worth of bribes and kickbacks to doctors who operated pain clinics, in exchange for more frequent prescriptions of the company's fentanyl product, to non-cancer patients, according to charging documents and a statement released on Thursday by federal law enforcement.
“The bribes and kickbacks took different forms, but were most frequently disguised as fees the company paid the practitioners for marketing events,” federal prosecutors said.
Doctors taken out to nightclubs by pharma executivesSome executives invited doctors to their company headquarters in Arizona, and took them out for a night in the town, entertaining physicians at "clubs", where they stayed till dawn.
One doctor from Florida "had to have had one of the best nights of his life", one of the company's regional sales managers wrote in a text message to a sales rep, according to an indictment.
The following week, the doctor wrote 17 prescriptions for the company, when he usually averaged about three. He also received US$260,050 in several payments over three years, for participating in the company’s speaking program - something the federal officials suspect as a mechanism for bribing doctors.
He was not the only one. Several doctors received more than US$100,000 as part of the scheme - one was paid more than US$275,000.
The company not only bribed doctors, but "conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients."
Company did not focus on patient safety"They contributed to the growing opioid epidemic and placed profit before patient safety," said Harold H. Shaw, special agent at the FBI.
"The charges against individuals discussed in the DOJ press release relate to previously disclosed investigations," Insys said in a statement. It also said that it will continue to cooperate with the relevant authorities in ongoing investigations and assured that they will be committed to comply with laws and regulations that govern all their other products and business practices.
However, this was not the first time the company faced state investigations related to the alleged kickback scheme. Previously a sales rep in Alabama and a nurse in Connecticut pleaded guilty to fraud charges related to off-label Subsys prescribing. It also faced a separate round of federal charges in New York and a group of shareholders have filed a class-action lawsuit against the company.
A slew of criminal charges places company in the deep endThe 26-year-old company has gained notoriety in recent months for bankrolling the campaign against marijuana during the November election by contributing US$500,000 to help defeat a ballot initiative that would have allowed the sale of recreational marijuana in the state.
Babich left last November and since then, the company has been working hard to convince investors that it has become a different company since the whole group of executives left.
The founder John Kapoor has since taken matters into his own hands and set up new systems to prevent abuses and reassured that the company is now only focused on the cancer pain market for Subsys. The company is now searching for a new chief executive to replace Kapoor.
The company’s estimated net worth has dropped by about US$600 million, partially due to the decline of its shares. MIMS
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