Monday, March 25, 2019

Former pharmaceutical CEO pleads guilty to opioid bribery scheme

On Wednesday, former Insys president and CEO Michael Babich pled guilty in federal court.

The former president and CEO of Insys Therapeutics, Inc., recently pleaded guilty to conspiring to bribe practitioners in various states, many of whom operated pain clinics, in order to get them to prescribe a fentanyl-based pain medication. According to court documents, Insys sales representatives bribed doctors by taking them to strip clubs and paying for $500 bottles of champagne.

In December 2016, former Insys president and CEO Michael Babich and five other former Insys executives and managers were charged with conspiring to bribe doctors to prescribe Subsys, an under-the-tongue fentanyl spray for managing severe pain in cancer patients. By targeting and providing kickbacks to doctors, clinicians, and other medical professionals, Insys pushed Subsys onto many patients who later developed opioid addictions throughout 2012 and 2015.

According to the Centers for Disease Control and Prevention (CDC), fentanyl is a synthetic opioid pain reliever, approved for treating severe pain, typically advanced cancer pain. It is 50 to 100 times more potent than morphine.

In November 2018, former Vice President of Sales Alec Burlakoff pleaded guilty to one count of racketeering conspiracy and agreed to testify as a government witness. According to court documents, employees of a bribed practitioner’s office were moved onto the Insys payroll. Additionally, relatives and girlfriends of the medical professionals who were high volume writers were also hired as compensation.

On Wednesday, former Insys president and CEO Michael Babich pled guilty in federal court. Although Babich faces up to 20 years in prison, he has agreed to cooperate with prosecutors prior to the racketeering trial of the company’s founder, John Kapoor, later this month, as well as four other former executives: Richard Simon, Joseph Rowan, Michel Gurry, and Sunrise Lee.

“This was a very expensive drug and a very dangerous drug if abused,” Assistant U.S. Attorney Fred Wyshak Jr. told U.S. District Court Judge Allison Burroughs. “In essence, the defendant…used the Speaker Program to bribe medical professionals to prescribe Subsys to as many patients as possible.”

Insys executives set up Speaker Programs around the country, including in Massachusetts restaurants, that in many cases were sham events, prosecutors asserted. Sometimes, only the doctor’s staff and friends would show up at an event, where they ate and drank on the company’s tab if the medical provider had written a high volume of Subsys prescriptions.

In 2017, Babich’s wife, a former Insys sales representative named Natalie Babich, pleaded guilty to conspiring to pay kickbacks. She testified last month at the trial of Christopher Clough, a former physician assistant in New Hampshire accused of accepting kickbacks from Insys. Clough was convicted on December 18.

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