U.S. joins whistleblower case against Insys over kickbacks

[May 15, 2018]  By Nate Raymond and Jonathan Stempel

(Reuters) - The U.S. Department of Justice has joined whistleblower litigation accusing Insys Therapeutics Inc of trying to generate more profit by paying kickbacks to doctors to prescribe powerful opioid medications.

The government's involvement was disclosed in a filing made public on Monday. It adds firepower to the civil litigation as Insys tries to resolve a federal probe into its marketing of Subsys, a spray form of fentanyl.

Six U.S. states - California, Colorado, Indiana, New York, North Carolina and Virginia - also joined whistleblower litigation against Insys, according to the filing in U.S. District Court in Los Angeles.

The litigation comes amid a wave of related criminal cases against medical practitioners, and former executives and sales representatives employed by Insys, including its billionaire founder John Kapoor.

In a separate filing, the Justice Department asked that the litigation be put on hold until the criminal cases were resolved.

Chandler, Arizona-based Insys had no immediate comment. Its shares closed up 7.6 percent at $7.36 on the Nasdaq.

Subsys is an under-the-tongue spray approved to treat severe pain in cancer patients who are already receiving and tolerant to around-the-clock opioid therapy.

The U.S. government accused Insys of having since 2012 offered "sham" speaking fees and lavish meals to induce doctors to prescribe Subsys.

It also said Insys knowingly caused Medicare and other federal health care programs to pay for Subsys by encouraging doctors to prescribe it when it was not medically necessary, or by misrepresenting patients' diagnoses.

Opioids, including prescription painkillers and heroin, played a role in a record 42,249 U.S. deaths in 2016, according to the U.S. Centers for Disease Control and Prevention.

A box of the Fentanyl-based drug Subsys, made by Insys Therapeutics Inc, appears 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/File photo

In March, President Donald Trump called for litigation against companies over their roles in what he has called a nationwide epidemic.

Federal prosecutors in Boston have said Kapoor and six other former Insys executives and managers schemed to bribe doctors to prescribe Subsys and to defraud insurers into paying for it.

Insys has estimated it might cost at least $150 million to resolve the Justice Department probe.

The litigation that the U.S. government joined included a 2013 lawsuit by Maria Guzman, a former Insys sales representative who said doctors improperly prescribed Subsys for off-label uses such as treating back pain.

She sued under the False Claims Act, which lets private whistleblowers sue on the government's behalf and share in recoveries.

(Reporting by Nate Raymond in Boston and Jonathan Stempel in New York; Editing by Tom Brown and Leslie Adler)

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