Posted by Michael Martin.
Six former executives and managers of the pharmaceutical company Insys Therapeutics Inc. were arrested “on charges that they led a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud healthcare insurers” (Dep. of Justice). The spray drug, named “Subsys,” is a strong opioid that is typically prescribed to cancer patients suffering from breakthrough pains. Insys bribed doctors to prescribe their drug to patients, many of which did not even have cancer, in high doses. Insurance companies became skeptical of the drug, because it was not prescribed to cancer patients, which resulted in the former executives of the company to mislead providers with the ““reimbursement unit” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers” (Dep. of Justice). Employees of this unit were pretending to call insurers from a doctor’s office. “Insys also set up its phone system to block the origin of the calls” (Thomas).
Insys was writing off the bribes and kickbacks to the doctors as speaking fees. The issue with the speaking fees is that the “events” held by Insys were usually entirely fabricated on paper, and were really just a few Insys members having dinner with a “speaker” doctor at a fancy restaurant. On one occasion, Alec Burlakoff, the former vice president of Insys, texted a sales representative about the communication skills of the doctors saying “They do not need to be good speakers, they need to write a lot of” prescriptions for Subsys. In the case of an Alabama doctor, after becoming a paid speaker, his prescription count increased from two a week to about eleven (Thomas).
The actions of the Insys executives are not only illegal, but are also highly unethical. Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, said “[Insys] contributed to the growing opioid epidemic and placed profit before patient safety” (Dep. of Justice). Michael L. Babich, 40, the former CEO and President of the company, “is charged with conspiracy to commit racketeering, conspiracy to commit wire and mail fraud and conspiracy to violate the Anti-Kickback Law.” Burlakoff, Richard M. Simon, 46, former National Director of Sales; and Regional Sales Directors, Sunrise Lee, 36, and Joseph A. Rowan, 43 “are charged with RICO conspiracy, mail fraud conspiracy and conspiracy to violate the Anti-Kickback Law.” And former Vice President of Managed Markets, Michael J. Gurry, 53, “is charged with RICO conspiracy and wire fraud conspiracy” (Dep. of Justice).
The charges for RICO and fraud crimes are “no greater than 20 years in prison, three years of supervised release and a fine of $250,000, or twice the amount of pecuniary gain or loss.” Plus a mere $25,000 fine for violating the Anti-Kickback Law, with a maximum of five years in prison.” This minimal punishment becomes even more disturbing when you realize that the “actual sentences for federal crimes are typically less than the maximum penalties” (Dep. of Justice).
Michael is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2019.
Sources:
https://www.justice.gov/usao-ma/pr/pharmaceutical-executives-charged-racketeering-scheme