Feds join lawsuits claiming Insys used strip club visits, super-doses and more to boost Subsys sales

Prosecutors have already charged Insys founder John Kapoor and won guilty pleas from two characters in an ongoing kickbacks probe. Now, the Justice Department has escalated the case by joining in with whistleblowers who've detailed a stunning range of techniques the company allegedly used to push its powerful opioid painkiller.

The DOJ is allying with a half-dozen whistleblowers—among them former Insys employees and workers at a pharmacy benefits manager—who allege the company violated the federal False Claims Act by marketing Subsys for unapproved uses and using free dinners and entertainment to persuade doctors to prescribe more of its fentanyl nasal spray.

Six states also joined the litigation, according to the government’s filing. The action comes just two months after the DOJ charged five New York doctors with participating in the alleged kickback scheme and revealed that two former Insys employees pleaded guilty and are now cooperating with the government. The DOJ has requested that the False Claims litigation be held until the criminal cases against Insys are completed.

Insys released a statement Tuesday saying it is engaged in an ongoing dialog with the DOJ. When the company’s founder, John Kapoor, was charged with racketeering back in October, he issued a statement saying he was confident he would be vindicated. The company had previously told investors it may have to spend $150 million to settle charges against it, and its discussion with the DOJ "has not resulted in information that would cause the company to revise this estimate," according to Tuesday's statement.

Insys has undergone a management overhaul, and said in the statement that it is now "a completely transformed organization, with a promising pipeline, a strong commitment to serving patients as well as an organizational culture of high ethical standards."

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The government’s newly unmasked case alleged that starting in 2012, Insys operated a “sham” speaking program, paying physicians to talk about Subsys to healthcare professionals. In reality, the suit alleges, the speeches didn’t include “substantive” information about the drug.

“Many of these speeches have been attended only by the prescriber’s own office staff, by close friends who attended multiple presentations, or by people who were not medical professionals and had no legitimate reason for attending,” the suit reads.

The court document goes on to lay out the types of kickbacks Insys allegedly provided, including visits to strip clubs, “lavish” dining and entertainment outings and jobs for relatives and friends of people who prescribed Subsys. It details the actions of more than 19 prescribers and Insys sales representatives, including some who have been convicted for their roles in the company’s alleged kickback schemes.

They include Heather Alfonso, a nurse from Connecticut, and Natalie Levine, an Insys sales representative, both of whom pleaded guilty to violating antikickback statutes. Alfonso took $83,000 in speaking fees from Insys for more than 70 dinner speeches, according to the lawsuit, resulting in charges to Medicare of more than $1.2 million for Subsys prescriptions.

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. A Pennsylvania doctor, for example, was paid $100,000 for 40 speeches, and the doctor's daughter got a job as an Insys sales representative shortly after graduating college, the lawsuit stated. Medicare paid $4 million for Subsys prescribed by that doctor, the government alleged.

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The case against Insys revolves around allegations that the company marketed Subsys to treat many types of pain, though it was only FDA-approved for cancer pain. The DOJ’s lawsuit offers examples of Insys training sales representatives to pitch the product for those off-label uses.

“When a patient’s in pain and it’s a severe pain … is it different they have cancer pain … or is it different they got, like, back pain … That’s the whole point, pain is pain,’” one executive said during a sales meeting, according to the suit.

Most of the patients who received Subsys prescriptions weren't cancer patients, the lawsuit alleged. The government is seeking reimbursement for Medicare spending on scripts for patients who shouldn’t have been covered, as well as “recovery of all monies by which Insys has been unjustly enriched.”

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.

In 2012, Guzman alleged, Insys created a new marketing campaign some dubbed “the kiss of death message." Insys representatives were told to advise doctors that 100 micrograms of Subsys was not enough to relieve pain. Managers sent emails to sales reps daily reporting prescriptions below 400 mcg.

One employee who persuaded a doctor to switch a patient from a competing drug to Subsys at a dose of 1,200 micrograms received a congratulatory email—“Cha Ching again!” That was a reference to the $40,320 Insys would reap from that single prescription, Guzman’s whistleblower suit alleged.

In a single week in 2013, the lawsuit claims, 12 new patients went on Subsys for the first time, each at an average starting dose of 600 micrograms. Only one was prescribed the FDA-recommended dose of 100 micrograms.

Editor's note: This story has been updated to include input from Insys.