Nurse pleads guilty to taking Insys kickbacks as Subsys marketing probe continues

In an apparent sign that federal prosecutors are zeroing in on the pain-drug maker Insys Therapeutics ($INSY), a Connecticut nurse and top prescriber has pleaded guilty to accepting $83,000 worth of kickbacks from the company.

As The New York Times reports, Insys previously disclosed that the feds are looking into its marketing practices. The company's biggest drug is Subsys, a spray form of the high-powered painkiller fentanyl approved only for use in cancer patients.

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, the NYT reports. As part of her plea agreement, Alfonso admitted that the speaking fees influenced her prescribing decisions. Prosecutors said that Alfonso prescribed Subsys to many patients who did not have cancer, the drug's only approved indication.

Subsys sales have grown quickly, despite its narrow market. The sublingual spray brought in $219.5 million for 2014, more than double its $95.8 million total the previous year. Fourth-quarter 2014 sales alone amounted to more than $60 million.

Insys sales reps previously told the Times that they were trained to begin talking about cancer pain with doctors and other potential prescribers--like Alfonso--and then move into a more general discussion about pain. Last year, script numbers showed that half of Subsys prescriptions were being written not by oncologists or pain specialists--as the FDA had directed--but by other types of providers, including GPs and dentists.

Former federal prosecutor Marcella Auerbach

Now, the prosecutors' move against Alfonso can't be a good sign for the company, one legal expert told the newspaper. "I think it means big trouble for the company," former federal prosecutor Marcella Auerbach told the Times. "I think it takes two to tango to do kickbacks--a giver and a receiver."

There's precedent for that sort of thinking. The long-term care pharmacy provider Omnicare ($OCR) in 2009 settled kickback claims with the Department of Justice, which cited its recommendations in favor of Johnson & Johnson's ($JNJ) antipsychotic drug Risperdal. J&J later found itself fighting DOJ claims that it paid kickbacks to Omnicare, aiming to boost Risperdal scripts.

- see the NYT story