Several former top executives at a pharmaceutical company that sells the powerful painkiller fentanyl were arrested Thursday and accused of bribing doctors, defrauding insurance companies, and fueling America’s opioid addiction crisis.
Federal prosecutors in Massachusetts charged Michael Babich, the 40-year-old former CEO of Insys Therapeutics, with conspiracy to commit racketeering and a range of other crimes related to sales of Subsys, a sublingual fentanyl spray intended for cancer patients experiencing severe pain. Six other former Insys executives, including the company’s former national sales director, were also arrested and charged in the conspiracy, prosecutors said.
Fentanyl is a synthetic opioid that’s about 100 times more powerful than morphine and 40 times more potent than heroin. The drug has been blamed for contributing to the massive spike in fatal overdoses across the U.S. in recent years.
Under Babich and the other executives, Insys allegedly paid hundreds of thousands of dollars worth of bribes and kickbacks to doctors who operated pain clinics in exchange for the physicians prescribing the company’s fentanyl product to non-cancer patients, according to charging documents and a statement released Thursday by federal law enforcement.
“The bribes and kickbacks took different forms, but were most frequently disguised as fees the company paid the practitioners for marketing events,” federal prosecutors said. Several doctors reportedly received more than $100,000 as part of the scheme, and one was paid more than $275,000.
The Arizona-based company also allegedly “conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients.”
“They contributed to the growing opioid epidemic and placed profit before patient safety,” said Harold H. Shaw, special agent in charge of the FBI’s Boston field division.
“The charges against individuals discussed in the DOJ press release relate to previously disclosed investigations,” Insys said in a statement. “Insys continues to cooperate with all relevant authorities in its ongoing investigations and is committed to complying with laws and regulations that govern our products and business practices.”
The company previously faced state investigations related to the alleged kickback scheme, and a separate round of federal charges in New York. A group of shareholders has also filed a class-action lawsuit against the company. One former sales rep has already pleaded guilty to fraud charges.
Insys gained notoriety recently for bankrolling the campaign against marijuana legalization in Arizona during the November election. The company, which is developing a synthetic marijuana painkiller, contributed $500,000 to help defeat a ballot initiative that would have allowed recreational marijuana sales in the state.