Already under a number of investigations from state and federal authorities for its Subsys marketing, beleaguered Insys Therapeutics now faces yet another legal challenge.
In a new lawsuit filed this week, insurance giant Anthem alleged the pain drugmaker managed a “creative, fraudulent, and illegal” scheme for several years to secure millions in improper reimbursements for the powerful opioid Subsys.
According to the lawsuit, Insys management knew the off-label market for Subsys would be far more lucrative than the drug’s legal use to manage breakthrough pain from cancer. So Insys execs created a two-step system designed to maximize sales, Anthem says.
First, according to Anthem, the drug company paid docs to write scripts for its under-the-tongue opioid spray through speaking fees at “sham” events. Then, the company created an in-house reimbursement team, Anthem says, which submitted “decidedly false and misleading” information to win coverage for those Subsys scripts.
Subsys was approved in 2012 to treat cancer-related pain, but the company is alleged to have marketed its opioid for a larger group of pain patients. The drug’s quick sales takeoff prompted attention to Insys’ promotion techniques.
Insys representatives didn’t immediately respond to a request for comment.
Anthem alleges that Insys scammed $19 million worth of reimbursements, and now the insurer wants to be made whole. It’s asking for an award of actual damages, punitive damages and more.
The lawsuit is the second legal drama at Insys this week after two former sales reps—including the wife of former CEO Michael Babich—pleaded guilty to conspiring to violate a federal anti-kickback law on Tuesday. Both face up to 5 years in prison.
Insys’ sales tactics have been under the microscope for several years, with the probe reaching management last year. Back in December, the Justice Department arrested Babich and a group of other former executives for allegedly leading a “nationwide conspiracy” to bribe doctors to boost scripts.
Details from that federal indictment highlighted an alleged effort in several states to offer hundreds of thousands of dollars in kickbacks through meals and, in one instance, a 4 a.m. night at a club with a practitioner who ran a pain center in Florida.
“He had to have had one of the best nights of his life,” an Insys exec wrote via text afterward, according to the government document. By the next week, the practitioner had issued 17 Subsys prescriptions, authorities contend.
According to the indictment, an Insys exec followed up to the practitioner via text: “[W]e appreciate you more than you could believe.”
In its most recent 10-K filing with the SEC, Insys disclosed that its Subsys promotion is under investigation by more than a dozen states and federal authorities with the Department of Health and Human Services Office of the Inspector General.
Before that group of six executive arrests late last year, authorities charged a few former Insys staffers.