Former pharma execs arrested in bribery scheme
- Six former executives of Insys Therapeutics were arrested and charged Thursday for bribing doctors to prescribe Subsys, a fentanyl-based painkiller, and for defrauding health insurers who balked at paying for the drug outside of its approved patient population.
- The execs, including the ex-CEO Michael Babich, allegedly paid (or conspired to pay) kickbacks to medical practitioners to encourage medically unnecessary prescriptions of Subsys for patients not diagnosed with cancer. Subsys is specifically approved to treat cancer pain.
- Aside with the ex-CEO, the arrests include the former VP of sales, the former national director of sales, two former regional sales directors, and the former VP of managed markets for the Phoenix, AZ-based company.
More than a year after news surfaced that Insys executives were being investigated for their actions regarding the sale of their fentanyl-based drug, the U.S. Attorney's Office of the District of Massachusetts announced the arrests of the six executives.
The charges include bribing practitioners who ran pain clinics to prescribe the drug to people who did not have cancer and includes allegations the former executives "conspired to mislead and defraud" health insurance providers. The former Insys executives allegedly set up a reimbursement unit that allowed the company to get prior authorization of insurers and pharmacy benefit managers.
Insys has been under investigation from federal authorities, as well as state authorities in California, Massachusetts, Connecticut, Arizona and Illinois.
The arrest come amid a national opioid addiction epidemic. On an average day in the U.S. there are 650,000 opioid prescriptions dispensed, according to the U.S. Department of Health and Human Services. More people died of drug overdoses in 2014 than any year on record and six out of ten of those deaths were due to opioid abuse. More than $55 billion in health and social costs are attributed to opioid abuse each year.
"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," said United States Attorney Carmen M. Ortiz in a statement.
In February, former Insys sales manager Natalie Reed Perhacs pleaded guilty to charges of conspiracy to commit health care fraud including engaging in kickback schemes in the United States District Court for the Southern District of Alabama. A nurse practitioner was also charged in 2015 with accepting kickbacks from the company.
Babich stepped down as CEO of Insys in November 2015 after the news of the investigation broke. Babich is charged with conspiracy to commit racketeering, conspiracy to commit wire and mail fraud and conspiracy to violate the Anti-Kickback Law.
Revenues at the company have dropped significantly since the scandal broke. In the first nine months of 2015, Insys — which depended largely on Subsys for sales — brought in $239 million. Nine months sales in 2016 dropped down to $189 million, according to the company's most recent quarterly report.
Insys did not return requests for comment at the time of publication.
- Department of Justice Press release
- BioPharma Dive Insys Therapeutics under investigation for pushing powerful pain drug