Regulatory Focus™ > News Articles > Former Insys Executives Arrested on Racketeering Charges

Former Insys Executives Arrested on Racketeering Charges

Posted 08 December 2016 | By Michael Mezher 

Former Insys Executives Arrested on Racketeering Charges

Six former Insys Therapeutics executives and managers were arrested on Thursday on charges that they conspired to bribe healthcare practitioners to prescribe the company's fast-acting fentanyl spray Subsys.


The US Food and Drug Administration (FDA) approved Subsys in 2012 with a narrow indication for managing "breakthrough pain in adult cancer patients who are already receiving and who are tolerant to around-the-clock opioid therapy for underlying persistent cancer pain."

At the time it was approved, Subsys was given a lengthy boxed warning for the risk of fatal respiratory depression, medication errors and its potential for abuse. FDA also required Insys to carry out an extensive risk evaluation and mitigation strategy (REMS) that limits access to the drug to only registered healthcare professionals, pharmacies and distributors.

Charges and Arrest

According to the charges, the former Insys employees paid bribes and kickbacks to doctors who wrote "large numbers" of prescriptions for Subsys, mostly off-label to patients without cancer.

"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," said FBI agent Harold Shaw, adding that the executives' actions "contributed to the growing opioid epidemic and placed profit before patient safety."

The former employees arrested include Insys CEO Michael Babich, vice president of sales Alec Burlakoff, vice president of managed markets Michael J. Gurry, national director of sales Richard Simon, and regional sales directors Sunrise Lee and Joseph A. Rowan.

Alongside the accusations of bribery, the charges also allege that the former employees set up a "reimbursement unit" with the goal of increasing sales by boosting the percentage of prior authorizations from insurers and pharmacy benefit managers who did not want to pay for the drug when prescribed to non-cancer patients.

The arrests add to a growing list of cases surrounding the company's sales practices for Subsys: In 2015, a Connecticut nurse pleaded guilty to accepting $83,000 in kickbacks from the company. In 2016, a former Insys sales representative in Alabama pleaded guilty to anti-kickback laws and two former Insys employees were arrested for their role in a kickback scheme in New York. In August, Illinois Attorney General Lisa Madigan filed a lawsuit against the company for deceptively marketing Subsys for uses outside its approved labeling, such as treating back and neck pain.

Department of Justice, Charges

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