Feds arrest ex-sales manager at Insys on kickbacks charges


Legal woes continue to pile up for former Insys Therapeutics ($INSY) employees. Officers arrested another ex-sales manager, who'll face new kickbacks charges stemming from hundreds of “sham” speaking programs designed to promote the powerful pain drug fentanyl.

Former Insys district sales manager Jeffrey Pearlman helped organize "educational" events, usually held at upscale restaurants, designed to induce doctors to step up prescriptions of the fentanyl spray Subsys, according to the criminal complaint filed in Connecticut federal court.

The events were typically “just a gathering of friends and co-workers where no educational component took place,” the court filing states. To disguise the events as legit speaking programs, sign-in sheets were forged, with Pearlman's knowledge, the document states.

Docs could bring in a speaking fee at $1,000 and above for attending, according to prosecutors. One Connecticut healthcare provider, who’s acting as a cooperating witness, netted $83,000 through the programs.

The case comes after Connecticut nurse Heather Alfonso pleaded guilty last June to accepting $83,000 in kickbacks from the company. At the time, prosecutors said she prescribed Subsys to many patients who weren’t suffering from cancer, its FDA-approved indication.

Prosecutors contend that the Subsys prescriptions written as a result of the scheme were paid for by Medicare, Medicaid and other private insurers. The cooperating witness acknowledged a greater willingness to prescribe and recommend the painkiller after attending the programs.

Though the complaint doesn't mention Insys by name, Pearlman worked as a district sales manager at the company from February 2013 to December 2015, according to a LinkedIn account.

The sales manager received quarterly bonuses based on sales figures, the complaint says; in the third quarter of 2013, he netted a bonus worth more than $95,000.

To those following the Insys story, the new charges aren’t likely to come as a surprise. Just last month, two former salespeople for the Arizona-based pharma pleaded not guilty to kickback charges. At the time they were charged, U.S. Attorney Preet Bharara said the two “corruptly induced doctors to prescribe millions of dollars’ worth of Fentanyl,” thereby contributing to the nation’s opioid epidemic.

Subsys, approved in 2012 to treat cancer pain, brought in $329 million in sales for the company last year.

Its quick takeoff prompted attention into Insys’ sales techniques. A New York Times analysis in 2014 found that half of scripts for the drug were written by general practitioners, neurologists and dentists, a departure from FDA recommendations that oncologists and pain specialists prescribe the med.

Along the way, the company has disclosed that it’s facing investigations by the Justice Department and other probes in individual states. Late last year, CEO Michael Babich stepped down. He was replaced by founder John Kapoor, who's now heading out the door himself, Insys recently said.

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Blockbuster sales of Insys painkiller raise suspicions of off-label marketing
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