- Insys Therapeutics makes a spray version of the powerful opiate fentanyl, which is many times stronger than morphine.The company pays speakers fees to doctors, some of whom have had their licenses suspended or face jail time for overprescribing the drug. In Connecticut, a nurse admitted to taking kickbacks in exchange for prescribing the drug.Insys faces federal inquiries and questions from lawmakers about its practices, including alleged promotion of the drug for off-label uses.
You’ve probably never heard of Insys Therapeutics. You’ve also probably never heard of its only drug, Subsys, a spray version of the powerful opiate fentanyl.
But the story of Insys and a mounting list of alleged misdeeds with Subsys will teach you a lot about the role of corporate greed in the opioid crisis.
In trying to understand the epidemic, we’ve heard many stories of devastated communities and families trying to cope. We’ve heard of addicted patients and overburdened treatment facilities.
But it has been harder to understand how these drugs spread so quickly, how suddenly it seemed like pain medication was everywhere.
Insys figured out one devastatingly effective and potentially illegal way to get their product out there.
It deployed a strategy of paying some doctors "speakers fees," while allegedly using inexperienced salespeople to bully others into using the drug. It faces inquiries into whether it promoted off-label use of a painkiller intended for cancer patients that is many times stronger than morphine. For some of this, Insys - which is publicly traded with a market cap of about $800 million - has already gotten in trouble with federal law enforcement.
Other aspects of its business practices remain under investigation or have yet to be proved in a court of law. We're bound to learn a lot more as congressional inquiries and shareholder lawsuits proceed, but there are some things we do know already. One of the most alarming is about some of the doctors prescribing the drug.
Of the 15 top prescribers of the Subsys in 2014, nine have faced or are facing serious legal allegations related to their medical practice. Most of these issues are directly related to their distribution of Subsys. At least two could spend decades in jail.
All of them have received tens of thousands of dollars from Arizona-based Insys. The company did not respond to Business Insider's repeated requests for comment for this story.
It's not hard to find out who the top prescribers of Subsys are. All of that information is available through the Centers for Medicare and Medicaid Services and has been compiled into an easy-to-search website by ProPublica. The year 2014 is the most recent for which data is available.
ProPublica did us all the favor of making it easy to see who is paying these doctors, on another site called Dollars for Docs. That data is available from 2013 to 2015. Put it together and you can learn quite a lot.
For example, you can learn that Dr. Gavin Awerbuch, the top prescriber of Subsys, accepted $89,975 from the company in 2013 and 2014. In 2015, the payments stopped. That may be because, by 2016, the avid baseball-card and ancient-coin collector had pleaded guilty of defrauding Medicare of $1.9 million and Blue Cross Blue Shield $1.2 million while overprescribing Subsys to patients.
After Awerbuch, the top Subsys prescriber is Dr. Mahmood Ahmad. He accepted $155,998 from Insys between 2013 and 2015. Last summer, he faced allegations of running a "pill mill" in Alaska. He denied this but surrendered his license there and had it revoked in Arkansas.
The doctors who take the fifth and eighth spots on the list, John Couch and Xiulu Ruan, were in business together. Earlier this year, they were found guilty of running a pill mill out of their Alabama clinics.
The doctors were arrested back in 2015 in an ongoing, wide-ranging investigation called "Operation Pilluted."
Not only were Couch and Ruan overprescribing Subsys and other powerful opioids to people who didn't need them, but they were also ripping off health-insurance companies by ordering patients to take unnecessary and expensive urine tests. They also would claim that doctors had seen patients when they had actually been seen by nurse practitioners so that they could bill a higher rate.
Each faces 20 years in prison and will pay the government $5 million in cash and give up property they bought with the $40 million they made. Ruan also forfeited 20 luxury sports cars, including two Ferraris and two Lamborghinis, according to The Wall Street Journal.
You can't see any financial information for either Christopher Clough or Heather Alfonso, prescribers 12 and 13 on the list. That's because they're not doctors.
Clough was a physician's assistant in New Hampshire and lost his license after being arrested and charged with one count of conspiracy and seven counts of receipt of kickbacks in relation to a federal healthcare program - all related to his alleged overprescription of Subsys. According to his indictment, Insys paid him $41,000 to talk about Subsys at events in 2013 and 2014.
Insys paid New Hampshire $2.9 million to settle allegations of aggressive marketing of Subsys, related to Clough's case.
What's harder to figure out than what these medical professionals are being paid is how or why they were introduced to Insys' speakers' program in the first place. That's where all these payments are coming from.
Just 1,600 doctors in the US are responsible for 90% of fentanyl-based prescriptions, and Insys has a laser focus on them. Its efforts are also focused on making more physicians join their ranks according to the company's most recent annual report.
"Our sales and marketing efforts have primarily targeted approximately 100% of these top 1,600 prescribing physicians with a focus on the highest prescribers," it says. "We believe that key factors for driving future Subsys growth include increasing the number of prescriptions written by those physicians who currently prescribe Subsys, increasing the number of TIRF REMS enrolled physicians and oncologists who prescribe Subsys, and allowing sufficient time for physicians and patients to identify their effective Subsys dose among our broad spectrum of dosage strengths."
TIRF REMS is the FDA program that medical professionals have to enroll in before they prescribe fentanyl.
There are a couple of steps to this:
Identifying high prescribers or likely high prescribers. Get those doctors interested in the drug. For that, Insys needs sales reps.
Investigative journalist Roddy Boyd at the Southern Investigative Reporting Foundation (SIRF) has done fascinating work on the latter.
In 2015, he reported that Sunrise Lee, Insys' former central and later western sales region head, had no pharmaceutical sales experience before joining the company. Her previous employer was Rachel's, a West Palm Beach strip club where she was a dancer.
"Doctors really enjoyed spending time with her and found Sunrise to be a great listener," Insys' national sales chief Alex Burlakoff told SIRF.
"She's more of a 'closer,'" he continued. "Often the initial contact [with a doctor] was made by another salesperson."
We know that former US Attorney for the Southern District Preet Bharara arrested two sales reps, Jonathan Roper and Fernando Serrano (pictured at the top of the post), from "Pharma Company-1" in June 2016.
They were charged with "violating the Anti-Kickback Statute in connection with their participation in a scheme to pay doctors thousands of dollars to participate in sham educational programs in order to induce the doctors to prescribe millions of dollars' worth of a fentanyl-based sublingual spray manufactured by Pharma Company-1."
Subsys is the leading fentanyl spray, and the company has acknowledged in public documents that it has received government agency requests, including subpoenas, from the Southern District among other districts.
So the allegations in this release and the accompanying complaint raise important questions about Insys' strategy.
"Not only did the defendants in this case allegedly bully sales reps into pushing this highly addictive drug, they paid doctors to prescribe it to patients," FBI Assistant Director Diego Rodriguez said. "The more prescriptions written, the more money the doctors made."
We'll find out more about that in court, hopefully.
There's more. Sen. Claire McCaskill, the Missouri Democrat, did include the company in her recently launched investigation into the marketing programs of opioid manufacturers. Insys, along with Purdue, Johnson & Johnson, Mylan, and Depomed will have to produce the following.
- Documents showing any internal estimates of the risk of misuse, abuse, addiction, overdose, diversion, or death arising from the use of any opioid product or any estimates of these risks produced by third-party contractors or vendors. Any reports generated within the past five years summarizing or concerning compliance audits of sales and marketing policies. Marketing and business plans, including plans for direct-to-consumer and physician marketing, developed in the past five years. Quotas for sales representatives dedicated to opioid products concerning the recruitment of physicians for speakers programs during the last five years. Contributions to a variety of third-party advocacy organizations: Any reports issued to government agencies during the last five years in accordance with corporate integrity agreements or other settlement agreements.
That's quite a range of information and may include Insys' reimbursement services, a unit that started a little before Insys' stock started shooting up in 2013. A federal court in Boston has charged the former head of that unit, Elizabeth Gurrieri, with instructing her unit to call insurance companies pretending to be doctors and give them something called "the spiel."
The FBI alleges that "the spiel" was essentially Insys employees falsely claiming that the patients had cancer, which would get Insys around the prior authorization requirement for Subsys.
Now, what's totally unclear is how the company will survive all this drama. In December, the former CEO, Michael Babich, was arrested along with five other executives in connection with a kickback scheme and the bribing of medical professionals to prescribe Subsys.
What's more, Insys is not only being attacked by law enforcement but also by its own shareholders.
"In general, the plaintiffs allege that the defendants violated the antifraud provisions of the federal securities laws by making materially false and misleading statements regarding our business and financial results during the class period, thereby artificially inflating the price of our securities," the company said in public filings.
There are two cases of this kind filed against the company in the Southern District of New York alone. Another shareholder case against the company has been filed in the US District Court for Arizona.
There are a number of agencies looking into whether or not the company promoted Subsys for off-label uses. Legally, doctors can prescribe the medication for whatever they deem necessary, but the company can't tell them to do so in any of its marketing materials. The company has received subpoenas from HHS, the Office of Inspector General, the US District Attorney's Office for the District of Massachusetts, and other attorneys general regarding this matter.
Here's what Insys has had to say about the legal troubles:
"[W]e believe a loss from an unfavorable outcome of these governmental proceedings is reasonably possible and an estimate of the amount or range of loss from an unfavorable outcome is not determinable at these stages. We believe we have meritorious legal positions and will continue to represent our interests vigorously in these matters.
"However, responding to government investigations has and could continue to burden us with substantial legal costs in connection with defending any claims raised. Any potential resulting fines, restitution, damages and penalties, settlement payments, pleas or exclusion from federal health care programs or other administrative actions, as well as any related actions brought by shareholders or other third parties, could have a material adverse effect on our financial position, results of operations or cash flows. Additionally, these matters could also have a negative impact on our reputation and divert the attention of our management from operating our business."
Subsys-prescribing doctors in some of these states have received subpoenas, too, according to company filings. It's no wonder then that Insys experienced a 32% decline in Subsys prescriptions from the fourth quarter of 2016 to the first quarter of 2017.
Everyone, it seems, is nervous. They should be.
Frank Chaparro contributed reporting.