Shares of Insys Therapeutics Inc (NASDAQ: INSY) traded down about 17 percent on Thursday afternoon after several former executives and managers were arrested on charges that they led a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud healthcare insurers.
As per the indictment, former CEO and president Michael L. Babich, former vice president of sales Alec Burlakoff, former national director of sales Richard M. Simon; former regional sales directors Sunrise Lee and Joseph A. Rowan and former vice president of managed markets Michael J. Gurry allegedly conspired to bribe practitioners across the United States.
The medication in question is Subsys, the companys only commercialized product right now. It is an opioid pain medication approved for the treatment of cancer patients experiencing breakthrough pain. However, through bribes and kickbacks, the executive team got physicians to prescribe the powerful narcotic to a large number of patients who had not been diagnosed with any type of cancer.
In addition, the District of Massachusetts U.S. Attorneys Office argued that the execs mentioned above 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 achieved this goal by setting up the reimbursement unit which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers, the news release explained.
I hope that todays charges send a clear message that we will continue to attack the opioid epidemic from all angles, whether it is corporate greed or street level dealing, United States Attorney Carmen M. Ortiz said.
Further details regarding the allegations, involved parties, potential sentences and fines can be found in the news release linked atop this article.
At last check, Insys shares were down 15.61 percent at $9.03.
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