Insys to pay $150 million to settle U.S. opioid kickback probe

(Reuters) - Insys Therapeutics said on Wednesday it had reached a deal to pay at least $150 million to resolve a U.S. Justice Department investigation into claims that the drugmaker paid doctors kickbacks to prescribe a powerful opioid medication.

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Insys announced the tentative deal shortly before a former district sales manager pleaded guilty in a federal court in Connecticut to engaging in a scheme to pay medical practitioners kickbacks to prescribe the company’s opioid product Subsys.

The plea by Jeffrey Pearlman made him the latest former employee to plead guilty as part of a federal probe that has led to several former executives and doctors being charged, including billionaire Insys founder John Kapoor.

The investigation has centered on the company’s efforts to promote Subsys, an under-the-tongue spray intended for managing pain in cancer patients that contains fentanyl, an opioid 100 times stronger than morphine.

The Justice Department has accused Insys of paying kickbacks to doctors to prescribe Subsys, often with fees to participate in sham speaker programs ostensibly meant to educate medical professionals about the drug.

Insys said the agreement in principle would require it to pay $150 million over five years and potentially make up to $75 million in additional payments.

“This is a very important step for our company to move forward and continue our transformative efforts to foster a compliant and ethical culture,” Insys Chief Executive Officer Saeed Motahari said in a statement.

The settlement came after the Justice Department in May announced that, as part of its efforts to combat the U.S. opioid epidemic, it had joined five whistleblower lawsuits accusing Insys of paying kickbacks to doctors to prescribe Subsys.

Kapoor was earlier charged by federal prosecutors in Boston in October with conspiring with six former executives or managers, including former Chief Executive Michael Babich, to bribe doctors to prescribe Subsys and to defraud insurers. They have pleaded not guilty.

Federal prosecutors in Connecticut separately charged Pearlman in 2016 and accused him of working with sales representatives to pay medical practitioners to participate in sham speaker programs to induce them to prescribe Subsys.

During a hearing on Wednesday in federal court in New Haven, Connecticut, Pearlman, 51, admitted that he conspired to violate an anti-kickback law in an effort to get more prescriptions written.

“I knew what I was doing,” he said. “It was wrong.”

Pearlman is scheduled to be sentenced on Oct. 31. He faces up to five years in prison.

Reporting by Nate Raymond in Boston, Andy Thibault in New Haven, Connecituct, and Manas Mishra in Bengaluru; Editing by Anil D’Silva, Shailesh Kuber, Bill Trott and Jonathan Oatis