Last week the Justice Department indicted six executives of Insys Therapeutics, a publicly traded pharmaceutical company. All are charged with criminal violations of the federal RICO statute (Racketeer Influenced and Corrupt Organizations Act). That law carries a sentence of up to 20 years in prison. What did these folks do that might warrant prison? Prosecutors say they paid kickbacks to doctors who wrote prescriptions for their fentanyl based pain medication.
Kickbacks in the healthcare setting are illegal. Medical decisions should be based on the best interest of the patient. Unfortunately, some pharmaceutical companies, ambulance services and hospitals use kickbacks to lure others to refer new patients.
Existing federal and state laws such as the Anti-Kickback Statute already make it a crime to pay kickbacks. This indictment takes enforcement to a whole new level, however. It is rare that prosecutors criminally charge the executives of pharmaceutical company. And using the criminal RICO statute against pharma C-Suite and senior executives? That is a first.
Justice Department Takes Aim at Insys’ Executives
Charged in the indictment are the former CEO and President, Michael L. Babich; Alec Burlakoff, former VP of Sales; Richard M. Simon, former National Sales Director; Michael Gurry, former VP of Managed Markets; and two regional sales directors, Sunrise Lee and Joseph Rowan. All have been arrested and are now released on bond.
The indictment lists eight unnamed physicians, a physician’s assistant and a nurse practitioner as co-conspirators.
According to the charges, the Insys executives conspired to bribe practitioners in various states to get them to prescribe a fentanyl-based pain medication. Fentanyl is an extremely powerful and addictive opioid pain killer. It’s use has been linked to many deaths including the musician Prince.
Questionable Ties between Fentanyl and Pill Mills
Many of the physicians who were prescribing the fentanyl product (called Subsys) operated pain management clinics. Prosecutors say that the in exchange for kickbacks and bribes, these doctors wrote large number of fentanyl prescriptions.
Subsys is approved and normally used for cancer patients in the final stages of their disease. Prosecutors say that the doctors receiving the bribes were often prescribing the drugs to non cancer patients.
Fentanyl based drugs are expensive. The average cost per patient is several thousands of dollars each month. Medicare and private insurance companies are therefore leery of their use. While the use for cancer patients with breakthrough pain is authorized by the FDA, prosecutors say that the Insys execs were trying to expand the market. If true, those actions are both dangerous to patients and expensive to taxpayers and those paying insurance premiums.
How Insys Execs Hid the Kickbacks
Healthcare providers know that gone are the days of writing checks to doctors or handing them bags of cash in return for referrals. The indictment says that the 6 executives hid the kickbacks by calling them “speaker fees”. A doctor who wrote lots of fentanyl prescriptions would get paid to speak.
In one email, sales VP Alec Burlakoff sent an email to sales staff to make sure they understood “the important nature of having one of their top targets as a speaker. It can pay big dividends for them.” The top sales targets, of course, are the doctors writing the most prescriptions. When one sales rep worried about the speaking ability of a doctor, Burlakoff allegedly wrote, “[t]hey do not need to be good speakers, they need to write a lot of [Fentanyl Spray prescriptions].”
Another email described recruiting a doctor as a speaker even though he “runs a very shady pill mill” and is “extremely moody, lazy and inattentive.”
The emails make the company’s intentions crystal clear. If there was any doubt, however, the indictment says Burlakoff spoke to a group of sales reps and said,
“[t]hese [doctors] will tell you all the time, well, I’ve only got like eight patients with cancer. Or, I only have, like, twelve patients that are on a rapid-onset opioids [sic]. Doc, I’m not talking about any of those patients. I don’t want any of those patients. That’s, that’s small potatoes. That’s nothing. That’s not what I’m here doing. I’m here selling [unintelligible] for the breakthrough pain. If I can successfully sell you the [unintelligible] for the breakthrough pain, do you have a thousand people in your practice, a thousand patients, twelve of them are currently on a rapid-onset opioids [sic]. That leaves me with at least five hundred patients that can go on this drug.”
Justice Department Takes Aim at Pharma Kickbacks
In announcing the indictments, U.S. Attorney Carmen Ortiz said, “Patient safety is paramount and prescriptions for these highly addictive drugs, especially Fentanyl, which is among the most potent and addictive opioids, should be prescribed without the influence of corporate money. I hope that today’s charges send a clear message that we will continue to attack the opioid epidemic from all angles, whether it is corporate greed or street level dealing.”
An FBI spokesperson had similar sentiments when he said, “As alleged, top executives of Insys Therapeutics, Inc. paid kickbacks and committed fraud to sell a highly potent and addictive opioid that can lead to abuse and life threatening respiratory depression. In doing so, they contributed to the growing opioid epidemic and placed profit before patient safety.
The indictment is certainly a warning shot to both doctors that accept bribes and overprescribe opioid pain killers and drug company executives behind those bribes and kickbacks.
False Claims Act and Whistleblower Awards
The RICO prosecution against the 6 Insys executives is criminal. Pharmaceutical companies, their officers and representatives and physicians can also be prosecuted under the False Claims Act. That law allows those with inside information about these schemes to earn large cash awards. If the fraud involves tax dollars, awards are usually available. (Medicare and Medicaid rely on tax money.)
Awards are typically between 15% and 30% of whatever the government collects.
To qualify for an award, you must have inside information, be first to file and you need a lawyer. Earning an award involves filing a sealed lawsuit in federal court. While the case is under seal, the government gets the opportunity to investigate. We take these cases on a contingent fee meaning we don’t get paid unless you get paid.
Interested in learning more? Visit our healthcare kickbacks and pharmaceutical fraud whistleblower pages or contact us directly. All inquiries are protected by the attorney – client privilege and kept completely confidential. The author of this post, attorney Brian Mahany, can be reached at or by telephone at (414) 704-6731.
Have information involving other types of Medicare fraud? We certainly want to speak with you.
Mahany Law – America’s Medicare Fraud Lawyers