Insys Therapeutics may soon turn the page on the high-profile federal probe into its Subsys sales practices—a probe that has already snared a half-dozen former Insys managers now facing criminal charges.
The company said Wednesday it agreed to pay the Justice Department $150 million to wrap up its role in the off-label marketing scheme. The settlement hasn't yet been finalized, though, and the amount could grow by up to $75 million if "certain events" occur.
The settlement, to be paid over five years, will wrap up the DOJ's civil and criminal investigation into the company. Former Insys executives and managers, including billionaire founder and former CEO John Kapoor, face separate indictments. Kapoor has pleaded not guilty.
“This is a very important step for our company to move forward and continue our transformative efforts to foster a compliant and ethical culture and to execute against our well-differentiated product pipeline, which we believe can bring value to patients globally,” said Saeed Motahari, president and CEO of Insys, in a statement.
Federal prosecutors have been focusing on Insys’ marketing of the powerful painkiller Subsys, an under-the-tongue spray version of fentanyl. It is considered much stronger than morphine and highly addictive, and is approved only for cancer pain that doesn't respond to other opioids.
The DOJ alleges that Insys aggressively promoted Subsys for other types of pain—even dental pain. Sales reps were taught to promote the drug’s off-label uses and to advise doctors to prescribe Subsys at dosages much higher than recommended by the FDA, the DOJ claims.
Meanwhile, the company allegedly set up sham speaking events to offer physicians payback for prescriptions and induce them to prescribe more. Besides shelling out thousands in speaking fees, Insys allegedly treated doctors to visits to strip clubs, lavish dinners and entertainment activities and provided jobs for Subsys prescribers’ friends and relatives.
Former executives and managers individually face charges that include racketeering, wire and mail fraud conspiracy and conspiracy to violate the Anti-Kickback Law. Kapoor and others allegedly conspired since 2012 to bribe doctors to prescribe the painkiller to noncancer patients and defrauded insurers into covering the costs.
Insys’ opioid prescribing scandal falls against the backdrop of a nationwide opioid crisis and industrywide marketing probes. Other drugmakers like Johnson & Johnson, Mylan, Depomed and Purdue Pharma have been put under scrutiny in probes initiated either by public prosecutors or lawmakers.
As for Insys, the $150 million is in line with the company’s previous expectation. Late last October, right after Kapoor was arrested, the company said it had accrued $150 million, “which represents our best estimate of the minimum liability exposure we expect to pay over five years.”
Since the scandal came into the spotlight, the company has also worked to transform itself and its image. It set up a clean slate of management and board members, as well as bringing in new blood at lower levels. It has also started to shift its focus away from opioids to other pain management agents like cannabinoids.