To encourage a Florida doctor to write more prescriptions of the potent painkiller Subsys, executives of the drug’s maker invited him to company headquarters near Phoenix and took him out for a night on the town, according to a federal indictment released Thursday.
Two top sales officials of Insys Therapeutics entertained the physician at a “club,” where they stayed until 4 a.m. “Went fantastic last night,” one of the company’s regional sales managers wrote in a text message to a sales rep, the indictment says. “He had to have had one of the best nights of his life.”
The next week, the doctor wrote 17 prescriptions for Subsys — a legal form of the opioid fentanyl — when he usually averaged about three. He also received $260,050 in payments over three years for participating in the Insys speaking program — something federal officials allege was nothing more than a mechanism for bribing doctors.
Federal prosecutors in Boston allege the Florida doctor was one of several medical practitioners bribed by Insys employees as part of a national conspiracy to boost sales of Subsys. Six former Insys executives and sales managers were arrested Thursday in response to a 60-page indictment detailing allegations of bribery and kickbacks.
Insys said in a statement that it is cooperating with authorities and “committed to complying with laws and regulations.”
Subsys was launched in March 2012 into a crowded field of competitors, which included other brand-name medications and several generics. The drug was approved only for cancer patients with intense flares of pain — a narrow market — and only about 2,000 doctors in the country prescribed fentanyl products. The drug is also expensive, costing thousands of dollars a month.
The company, prosecutors allege, overcame these challenges with a speaker program — whose stated purpose was to educate doctors on the use of the drug — to bribe doctors. In an email titled “Live Speaker Targets,” former Insys chief executive Michael Babich wrote to sales managers to make certain sales reps understood “the important nature of having one of their top targets as a speaker. It can pay big dividends for them.” In a text message to a sales rep, former Insys vice president of sales Alec Burlakoff wrote that doctors “do not need to be good speakers, they need to write a lot of” Subsys prescriptions.
To sweeten the pot, the Insys employees allegedly scheduled speaking events at establishments owned by doctors, or their families and friends. The events allegedly had little do with education: They were often held at high-priced restaurants and attendees were frequently just friends of the doctor hired as the speaker, the indictment alleges. Fake names were used on sign-in sheets, and some events had no attendees at all, according to prosecutors.
The indictment does not identify by name any of the practitioners who allegedly received the bribes and kickbacks.
The company meticulously tracked results from the speaker program, calculating a ratio of return on investment for each speaker using metrics such as the number of prescriptions written by the speaker and the total amount the company paid the doctor. If doctors failed to boost their prescribing after being paid to be an Insys speaker, the company would reduce the number of their speaking engagements, according to the indictment.
In the case of an advanced practice nurse in Connecticut, the sales manager for that state became frustrated when the nurse failed to prescribe more Subsys after being paid as a speaker. “Very simply when I look at return on investment as she has not motivated any new prescriber as of yet and she is not significantly increasing her own business, I am going to have tremendous difficulty in justifying more programs,” the manager wrote. The nurse eventually increased her prescribing and received $78,748 in speaking fees from the company.
One doctor in Arkansas allegedly promised Insys sales reps “more scripts than we can handle” once he started to be paid as part of the company speakers program.
In 2012, Burlakoff traveled to Michigan to meet with a doctor who owned a Saginaw pain clinic with more than 5,000 patients. Insys wanted him to write more Subsys prescriptions. After taking the doctor to dinner, the indictment alleges Burlakoff sent an email to members of the sales team telling them “expect a nice ‘bump’ fellas.”
The Michigan doctor was enrolled in the speakers program, receiving payments totaling $138,435, and his prescribing of Subsys increased, according to the indictment. Doctors like the one in Michigan “keep us in business,” Burlakoff wrote. He added, “lets get a few more and the rest … of this job is a ‘joke.’”
An attorney for Burlakoff, George Vien of Boston, said his client would plead not guilty and “fight the case.” The other defendants or their lawyers couldn’t be immediately reached for comment.
The Insys sales force targeted the top prescribers of all fentanyl products, according to the indictment.
When Babich received a list of doctors in the Insys speaker program writing a large number of prescriptions for competitors’ drugs, he allegedly emailed Burlakoff. “I thought we owned the high decile folks?” he wrote. “Lots of big names on there.”
The sales force for Insys reaped large financial gains of their own if the doctors they called upon increased their prescribing. In some cases, sales reps were assigned just one doctor — usually a big prescriber.
In Alabama, a sales rep was told by a superior he could make an additional $40,000 over three months if the doctor he was assigned to wrote just two Subsys prescriptions a week during that time.
The indictment alleges the former Insys employees also targeted doctors known to have questionable prescribing practices. In one case, the target was a doctor in the Chicago area that an Insys sales rep wrote in an email “runs a very shady pill mill and only accepts cash.” The doctor was eventually paid over $70,000 for company speaking events.
The key to the success of Subsys, according to the indictment, was incentivizing doctors to prescribe the drug to patients beyond the limited market of cancer patients suffering from breakthrough pain.
At a 2014 national sales meeting, Burlakoff told the sales force the cancer market was “small potatoes. That’s nothing.”
While the alleged bribes resulted in doctors writing more prescriptions for the drug, insurance companies were still reluctant to pay for Subsys prescribed to patients who did not have cancer.
To fix that problem, Babich and others allegedly created an elaborate system to trick insurers into making payments for off-label uses of the drug. They created a call center at Insys headquarters to handle insurance reimbursement approvals for doctors prescribing Subsys. Employees in this unit allegedly contacted insurers, creating the appearance they were calling from the office of the doctor who wrote the prescription, and deceiving them about the patient’s diagnosis and medical history. They often added a diagnosis of dysphagia, which is difficulty in swallowing. This gave a product like Subsys, which is a nasal spray, a big advantage over similar products that were in pill form and had to be swallowed. Other times, the employees of this unit would falsely claim the patient had cancer, according to the indictment.
Employees of the unit were rewarded with lucrative financial bonuses if the entire unit met a weekly target of reimbursement approvals. The target was known as “The Gate.”