Insys sued by Illinois AG for off-label marketing of Subsys opioid spray


After a former Insys Therapeutics ($INSY) sales rep admitted she had paid kickbacks to doctors to prescribe the company's sprayed cancer pain opioid fentanyl for off-label uses, it was just a matter of time before the company got sued for the same thing. That time has come.

The Illinois AG on Thursday filed suit against the Phoenix, AZ-based drugmaker for allegedly boosting its profits by “deceptively marketing and selling Subsys, a highly addictive opioid drug significantly more powerful than morphine and intended exclusively for the treatment of breakthrough cancer pain” for off-label uses. The suit accuses the company of targeting doctors, who instead of treating cancer patients, prescribe high volumes of opioids to patients who suffer from things like back pain.

The lawsuit, which accuses the company of healthcare fraud, seeks an unnamed amount of financial penalties as well as to permanently bar the company from selling Subsys, its only marketed product, in Illinois. The company could not be reached for comment.

“It’s this type of reprehensible and illegal conduct that feeds the dangerous opioid epidemic and is another low for the pharmaceutical industry,” Illinois AG Lisa Madigan said in a statement about the lawsuit.

That epidemic, which has been acknowledged by federal health officials, has been blamed by many politicians and law enforcement officials on aggressive sales by opioid drugmakers, many of whom have been sued. In fact, the city of Chicago has twice sued Purdue Pharma, Teva Pharmaceutical Industries ($TEVA), Johnson & Johnson's ($JNJ) Janssen unit, Depomed ($DEPO), Endo Health Solutions ($ENDP) and Allergan ($AGN) for contributing to opioid abuse by aggressively marketing the drugs.

The Illinois action comes as legal pressure is mounting against Insys Therapeutics, whose sales of Subsys have soared since its 2012 approval. The company has acknowledged that it is being investigated by the Justice Department as well as a number of states for its Subsys marketing.

The actions appear to altering the arc of Subsys sales. Insys had seen sales of Subsys grow quickly despite its approval only for breakthrough pain for cancer. Revenues hit $330.8 million last year, growing from $95.8 million in 2013, its first full year on the market. But in the first 6 months of this year, the company reported revenue of about $130 million, down 14% from the $148.4 million in the first half of 2015.

Financial filings also show a number of directors and officers have been unloading shares recently. And the company on Aug. 10 announced it terminated COO Dan Brennan, who had joined just 9 months ago. He was brought in by company founder John Kapoor last year to help run Insys after CEO Michael Babich stepped down amid the controversy.

Meanwhile, federal authorities have been pursuing Insys sales reps and Subsys prescribers around the country. Two former Insys Therapeutics salespeople this month pleaded not guilty to paying kickbacks to doctors after being indicted recently in New York. Last year a Connecticut nurse and top prescriber of the drug pleaded guilty to accepting $83,000 worth of kickbacks from the company. The nurse, Heather Alfonso, was one of Insys' paid speakers, and often collected fees for events attended only by an Insys sales rep, or by her own friends and colleagues.

Earlier this year, former Insys sales rep Natalie Reed Perhacs pleaded guilty in federal court in Alabama to conspiracy to commit healthcare fraud, including kickback schemes for Insys. She even told the court the company hired her at the urging of a doctor who was a top prescriber for the company and who had a personal interest in her.

- here’s the announcement

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