December 9, 2016
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON – More trouble is brewing for Arizona-based Insys as several former employees were indicted Thursday on charges they led a “nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud healthcare insurers.”
The indictment, initially reported by Stat News, noted that one Florida doctor wrote 17 prescriptions for Subsys, the pain reliever marketed by Insys, following “the night of his life” provided by Insys executives. In addition to a night on the town, the same doctor also allegedly received “260,050 in payments over three years for participating in the Insys speaking program,” a program that federal authorities claim was nothing more than a vehicle for kickbacks. Stat News listed a number of kickback allegations mentioned in the federal indictment.
On Thursday, six were charged by the government in the scheme, including: Michael Babich, 40, of Scottsdale, Ariz., who was the former president and chief executive officer of Insys; Alec Burlakoff, 42, of Charlotte, N.C., a former vice president of sales; Richard Simon, 46, of Seal Beach, Calif., former national director of sales; former regional sales directors, Sunrise Lee, 36, of Bryant City, Mich. and Joseph Rowan, 43, of Panama City, Fla.; and Michael Gurry, former vice president of managed markets, 53, of Scottsdale, Ariz.
The indictment said the former Insys executives conspired to defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients. To do this, the men established a unit for reimbursements, which the government said was dedicated to “obtaining prior authorization directly from insurers and pharmacy benefit managers.”
United States Attorney Carmen Ortiz said prescriptions for drugs like Subsys, which are highly addictive, should be prescribed “without the influence of corporate money.”
Harold Shaw, special agent in charge of the Federal Bureau of Investigation in Boston, said in a statement that the Insys executives charged in the scheme “contributed to the growing opioid epidemic and placed profit before patient safety.”
Thursday’s charges are not the first time Insys has been caught up in a kickback scheme to prescribe Subsys. In September, Jeffrey Pearlman, 49, of Edgewood, N.J., a former district sales manager for Insys, was charged in a kickback scheme. According to the federal complaint, between 2012 and 2015, Pearlman and his subordinate sales representatives used various tactics, including kickbacks, to get physicians and other prescribers to prescribe the drug. The feds said Pearlman used hundreds of sham “speaker programs.” According to the government the speaker programs appeared on the surface to be educational programs about the drug. However, the government alleged “the events were usually just a gathering of friends and co-workers, most of whom did not have the ability to prescribe the fentanyl spray, and no educational component took place.” The government said speakers were generally paid fees of $1,000 or more for attending. The government alleged Insys, again, it did not name the company in the charges, paid one healthcare provider approximately $83,000 in “illegal kickbacks” to prescribe the company’s fentanyl spray in favor of similar medications.
Last year, the company faced allegations it falsified data in order to sell more of its painkiller. In response, Insys said it is committed to patient safety and has complied with all law, including those related to adverse event reporting.
Also last year, the Southern Investigative Reporting Foundation (SIRF) issued a report alleging an Insys unit has been misleading insurers to change documents to state that pain was cancer-related in order to prescribe Subsys. SIRF maintains Subsys, the spray-on painkiller approved for the treatment of cancer-related pain, is 100 times more powerful than morphine. SIRF said the medication was being used to treat chronic pain that was not cancer related, including joint pain or pain related to military injuries. SIRF also alleged that some prescribers received tens of thousands of dollars in kickbacks to prescribe the medication.
