Fentanyl Maker May Settle Deceptive Opioid Marketing Suit

By Paul Gaita 08/08/17
In June, two former employees pled guilty to charges of violating anti-kickback laws after paying medical professionals to prescribe large amounts of Subsys.
hands shaking in background; gavel in foreground

The fortunes of Arizona-based pharmaceutical company Insys Therapeutics Inc. continued to plummet when it announced that it has set aside $4.5 million to settle a lawsuit brought against it by the state of Illinois, which alleged that the company used deceptive marketing practices to sell its fentanyl-based pain treatment drug Subsys.

The plan was announced during an earnings call to analysts on August 3, in which Insys CEO Saeed Motahari also reported a 38% decline in revenue due to a drop in sales for Subsys, resulting in a loss of $8.2 million for the quarter.

The settlement is the latest incident in a string of bad luck for Insys, which has so far weathered a $1.1 million settlement with the state of Oregon in 2015 over charges similar to the Illinois case, and a high-profile federal case in which two former employees pled guilty in June 2017 to charges of violating anti-kickback laws after paying medical professionals to prescribe large amounts of Subsys.

Illinois Attorney General Lisa Madigan filed suit against Insys in August 2016, alleging in a press release that the company marketed Subsys, an opioid painkiller intended for cancer patients, to doctors who had prescribed "high volumes of opioid drugs instead of focusing its marketing on oncologists."

Insys reportedly marketed the drug as a treatment for "breakthrough pain" linked to chronic conditions, including back and neck pain, and medical professionals who prescribed the highest and most costly doses of Subsys were allegedly awarded with dinners and even paid engagements at "sham speaking events." 

For these efforts, Insys is said to have accumulated nearly $12 million in sales of Subsys between 2012 and 2015, of which 94% was due to the state's Top 10 prescribers of the drug. Among these was Dr. Paul Madison, an anesthesiologist who wrote "approximately 58% of the Subsys prescriptions in the state" while treating almost no cancer patients. As a result, Madison's medical license was revoked in 2016.

During the August 3 phone call to analysts, Motahari said that resolving the legal issues that currently swirl around his company, including the "estimated potential settlement" was a "priority," and he intended to show the legal community, including the Justice Department, that "we're taking the right steps" and "the mistake won't happen again."

Insys posted a substantial drop in net revenue for the second quarter of 2017, plunging from $69.2 million for the same period in 2016 to $42.6 million this year. Insys shares were also down 3.2% at $10.65 per share at the time of the phone call; the decline continued a week later, where shares had dropped 5.42% to $9.43 on August 8.

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Paul Gaita lives in Los Angeles. He has contributed to the Los Angeles Times, Variety, LA Weekly, Amazon.com and The Los Angeles Beat, among many other publications and websites.