Insys: The Hits, They Just Keep Coming – One Rep Pleads Guilty to Conspiracy to Commit Commercial Bribery

We have previously written about Insys founder John Kapoor and other executives that have found themselves in hot water regarding an ongoing kickbacks probe. Recently, however, the Department of Justice (DOJ) turned up the heat on Insys by joining in with whistleblowers who have proffered a wide variety of techniques allegedly used by the company to sell its powerful opioid painkiller, Subsys.

The DOJ has joined a half-dozen whistleblowers, including former Insys employees and workers at a pharmacy benefits manager, who allege the company violated the Federal False Claims Act (FCA) by marketing the drug for unapproved uses and using myriad tactics – i.e., free dinners, golf games, tickets to sporting events, etc. – to persuade doctors to prescribe more of the fentanyl nasal spray. In addition to the whistleblowers, a half-dozen individual states have joined the litigation.

The DOJ’s filing lays out the types of kickbacks Insys allegedly provided, including visits to strip clubs, “lavish” dining and entertainment outings, as well as jobs for relatives and friends of people who prescribed Subsys. Sprinkled throughout the filing are details of actions of more than nineteen prescribers and Insys sales representatives, including some who have already been convicted for their roles in the alleged kickback schemes.

Many of the prescribers described in the DOJ’s suit were pain-management specialists whom Insys paid to speak at events typically attended only by the prescribers’ employees. For example, a Pennsylvania doctor was paid $100,000 for forty speeches, and the doctor’s daughter got a job as an Insys sales representative shortly after graduating college. Medicare paid $4 million for Subsys prescribed by that doctor, the government alleged.

The unsealed DOJ lawsuit reveals that the first whistleblower case against Insys was filed in 2013 by Maria Guzman, a former Insys employee. Her suit, which was simultaneously unsealed, alleged that in addition to paying speaking fees to prescribers, Insys encouraged physicians to prescribe Subsys doses as high as 800 micrograms—eight times the dosage recommended by the FDA.

“Our intervention in these cases is just one part of the Justice Department’s multi-pronged efforts to combat the opioid crisis,” said United States Attorney Nicola T. Hanna. “The illegal marketing activities alleged in the government’s case helped fuel the crisis by improperly introducing opioids into the market. We are committed to hold accountable corporations and individuals who use kickbacks, off-label promotions and other illegal activities to sell lethal and highly addictive narcotics. Our goal is bring about an end to the tragic epidemic that is harming untold numbers of people across the United States.”

After this revelation, Insys released a statement saying it is continuing an “ongoing dialog” with the DOJ and still has an aggregate $150,000,000 in minimum liability exposure, expected to be paid out over five years in connection with this investigation. According to the statement, the “ongoing dialogue has not resulted in information that would cause the company to revise this estimate,” which was initially filed in the quarterly report and Form 10-Q on November 3, 2017.

On May 31st one Insys rep pleaded guilty in NJ state court to conspiracy to commit commercial bribery.  The rep admitted that she participated in sham speaker programs which resulted in kickbacks.  She faces a possible prison sentence to up to five years.

The statement went on to note, “today INSYS is a completely transformed organization, with a promising pipeline, a strong commitment to serving patients as well as an organizational culture of high ethical standards. Throughout this transformation, INSYS has learned from the past and remains committed to significant innovation and investment in R&D, which the company believes will result in improving the lives of many patients.”