Facts

Insys Therapeutics, Inc. is a specialty pharmaceutical company that markets and sells Subsys, a sublingual form of fentanyl, a powerful and highly addictive opioid painkiller. Subsys has been approved by the Food and Drug Administration for the treatment of breakthrough pain in opioid-tolerant cancer patients. Torgny Andersson filed an action pursuant to the False Claims Act against Insys Therapeutics, Inc. The United States intervened and filed its own civil and criminal complaints in the intervention.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendant submitted or caused to be submitted claims for payment to the Medicare Program, the Medicaid Program, and the TRICARE Program. Plaintiff contended that defendant provided kickbacks to physicians and other potential Subsys prescribers, in violation of the Anti-Kickback Statute, to induce them to prescribe Subsys. Plaintiff claimed that these kickbacks took the form of speaking fees for sham speaking events, many of which were held at expensive restaurants, and many of which consisted of the prescribers dining with their friends or members of their own office staffs, and making little or no substantive presentation. Plaintiff also alleged that defendant employed healthcare providers' family members and friends in order to induce the providers to prescribe Subsys, even though the family members and friends were not qualified for the positions for which they were hired. Plaintiff asserted that defendant provided kickbacks to potential prescribers in the form of expensive meals and entertainment. Plaintiff also alleged that defendant established an internal business unit, sometimes referred to as the Reimbursement Center, that lied to representatives of federal health programs about patients' medical histories and conditions, including whether patients had cancer, to obtain approval for payment for Subsys prescriptions. Plaintiff contended that defendant illegally promoted the sale and use of Subsys for uses that were not approved by the Food and Drug Administration, and which were not medically accepted. Plaintiff also claimed that defendant provided kickbacks to Medicare patients taking Subsys by using two third-party foundations, Patient Services, Inc. and US Pain Foundation, as conduits to pay the copay obligations of those patients. The Reimbursement Center referred Medicare patients taking Subsys to the foundation for copay assistance from funds ostensibly established to assist patients with breakthrough cancer pain, even though defendant knew some of those patients did not have cancer. Plaintiff also contended that, on five separate occasions, defendant committed mail fraud by paying bribes and kickbacks to a healthcare practitioner to induce the practitioner to prescribe Subsys.

DEFENDANT'S CONTENTIONS: Defendant generally denied all contentions. As to plaintiff's criminal allegations, defendant will plead guilty to committing mail fraud by paying bribes and kickbacks to a healthcare practitioner to induce the practitioner to prescribe Subsys.

Result

The case settled. As part of the civil resolution, Insys agreed to pay $195 million to settle the allegations that it violated the False Claims Act. As part of the criminal resolution, Insys agreed to a detailed statement of facts outlining its criminal conduct with respect to the illegal marketing of Subsys; Insys will enter into a five-year deferred prosecution agreement with the government, while Insys' operating subsidiary will plead guilty to five counts of mail fraud; Insys will pay a criminal fine of $2 million and forfeiture of $28 million.