Arizona accuses drugmaker Insys of fraudulent opioid marketing

(Reuters) - Arizona sued Insys Therapeutics Inc on Thursday, accusing the drugmaker of engaging in a fraudulent marketing scheme aimed at increasing sales of a fentanyl-based cancer pain medicine called Subsys.

A box of the Fentanyl-based drug Subsys, made by Insys Therapeutics Inc, is seen in an undated photograph provided by the U.S. Attorney's Office for the Southern District of Alabama. U.S. Attorney's Office for the Southern District of Alabama/Handout via REUTERS

The lawsuit by Arizona Attorney General Mark Brnovich in Maricopa County Superior Court in Phoenix comes during a series of federal and state investigations centered on Insys’ drug Subsys amid a national opioid addiction epidemic.

The lawsuit accused Arizona-based Insys of paying doctors sham speaker fees in exchange for writing prescriptions of Subsys and of misleading insurers into believing patients who were prescribed the opioid had cancer when they actually did not.

Brnovich also sued three Arizona doctors whom the lawsuit said Insys paid on average $200,000 while they wrote prescriptions that generated over $33 million in sales of Subsys from March 2012 to April 2017.

“We need to put a stop to the unethical and greedy behavior in the pharmaceutical industry that is fueling the opioid crisis in our state,” Brnovich said in a statement.

The lawsuit seeks an injunction, restitution for customers and the disgorgement of any illegally earned profits.

Insys had no immediate comment. The three doctors - Steve Fanto, Nikesh Seth and Sheldon Gingerich - did not respond to requests for comment.

The case is the latest to center on Subsys, an under-the-tongue spray intended for cancer patients that contains fentanyl, a highly addictive and regulated synthetic opioid.

In December, federal prosecutors in Boston charged six former Insys executives and managers, including former Chief Executive Michael Babich, with engaging in a scheme to bribe doctors to prescribe Subsys.

Babich and his co-defendants have pleaded not guilty. Federal charges have also been filed in several other states against other former Insys employees and medical practitioners who prescribed Subsys.

Thursday’s lawsuit named as defendants two former Insys employees who have faced federal charges: Alec Burlakoff, a former vice president of sales, and Elizabeth Gurrieri, a former manager of reimbursement services.

Burlakoff has pleaded not guilty to racketeering conspiracy and other charges. Gurrieri pleaded guilty in June to one count of wire fraud conspiracy as part of deal to cooperate with U.S. authorities.

Their lawyers did not respond to requests for comment on Thursday.

Insys has said it is in talks with the U.S. Department of Justice to resolve the federal probe. It previously agreed to pay a combined $8.95 million to resolve investigations by attorneys general in Oregon, New Hampshire and Illinois.

Reporting by Nate Raymond in Boston; Editing by Lisa Von Ahn and Grant McCool