On Wednesday, August 8, 2018, Insys Therapeutics announced a deal to pay $150 million to resolve the United States Department of Justice (DOJ) investigation into claims that it paid doctors kickbacks to prescribe a powerful opioid medication, Subsys.
The settlement, to be paid over five years, will wrap up the DOJ’s civil and criminal investigation into the company. Former Insys executives and managers, including billionaire founder and former CEO John Kapoor, face separate indictments. Kapoor has pleaded not guilty.
Federal prosecutors have been focusing on Insys’ marketing of the powerful painkiller Subsys, an under-the-tongue spray version of fentanyl. It is considered much stronger than morphine, highly addictive, and is approved only for cancer pain that doesn’t respond to other opioids. However, the DOJ alleges that Insys aggressively promoted Subsys for other types of pain—even dental pain. Sales reps were taught to promote the drug’s off-label uses and to advise doctors to prescribe Subsys at dosages much higher than recommended by the FDA.
Insys said the agreement in principle would require it to pay $150 million over five years and potentially make up to $75 million in additional payments. “This is a very important step for our company to move forward and continue our transformative efforts to foster a compliant and ethical culture and to execute against our well-differentiated product pipeline, which we believe can bring value to patients globally,” Insys Chief Executive Officer Saeed Motahari said in a statement.
The announcement came minutes before a former district sales manager pled guilty to engaging in a scheme to pay medical practitioners kickbacks to prescribe Subsys in Connecticut federal court. The former district sales manager, Jeffrey Pearlman, was the latest employee to plead guilty as part of a federal probe that has led to several former executives and doctors being charged, including Insys found John Kapoor. Pearlman personally profited from this scheme through inflated quarterly bonuses he received that were based in large part on the sales results of the sales representatives he managed and pleaded guilty to one count of conspiracy to violate the anti-kickback law, an offense that carries a maximum term of imprisonment of five years and a fine of up to $250,000. His sentencing is scheduled for October 31, 2018.
Since the scandal surrounding Subsys surfaced, Insys has worked to transform itself and its image. It set up a new slate of management and board members, as well as bringing in new employees and members at lower levels. It has also started to shift its focus away from opioids to other pain management agents, such as cannabinoids. The final version of the agreement is expected to include other material nonfinancial terms and conditions that must still be negotiated, the company said.