Attorney General Porrino Announces State Lawsuit Alleging Greed-Driven Scheme to Boost Sales by Fentanyl Drug Maker Insys

TRENTON, N.J., Oct. 5 -- New Jersey Attorney General Christopher S. Porrino issued the following news release:

Attorney General Christopher S. Porrino announced today that New Jersey has filed a four-count lawsuit against Insys Therapeutics, Inc. charging that the company engaged in a greed-driven campaign of consumer fraud and submission of false claims to health insurers to increase the market share for its powerful opioid-fentanyl drug Subsys.

Filed today in Superior Court in Middlesex County, the State's complaint charges that, despite Subsys only having Food and Drug Administration (FDA) approval for the "narrow" purpose of treating breakthrough cancer pain in opioid-tolerant patients, Insys unlawfully directed its sales force to push Subsys for prescription to a broader patient population - patients suffering any type of chronic pain - and at higher doses.

Among other things, the complaint alleges that, Insys's greed has put "hundreds" of lives in jeopardy and "led to the death of at least one New Jersey resident" - a 32-year-old Camden County woman who was prescribed Subsys for fibromyalgia. In addition, the suit notes that two New Jersey state employee health benefits plans paid a total of approximately $10.3 million to reimburse Subsys prescriptions between 2012 and the third-quarter of 2016, while the State Worker's Compensation Program paid another $300,000.

"The conduct alleged in our lawsuit is nothing short of evil," said Attorney General Porrino. "Knowing full well it was putting lives in peril by pushing for broad based consumption of a highly-specialized and incredibly powerful prescription drug - a form of fentanyl approved only for treatment of pain-racked and opioid-tolerant cancer patients - Insys allegedly forged ahead and did it anyway.

"We contend that the company used every trick in the book, including sham speaking and consulting fees and other illegal kickbacks, in a callous campaign to boost profits from the sale of its marquee drug Subsys," Porrino said.

The State's lawsuit includes three counts alleging violation of New Jersey's Consumer Fraud Act and one count alleging violation of the New Jersey False Claims Act. The suit asks that Insys be assessed maximum civil penalties for each violation of the Consumer Fraud Act, and seeks three times the State's actual damages for violations of the False Claims Act, per that statute. The suit also seeks to have Insys held responsible for costs and fees incurred by the State in bringing the case.

From the 2012 market launch of Subsys until the present, the drug has accounted for approximately 98 percent of net revenues for Insys, a Delaware corporation with headquarters in Chandler, AZ.

Insys, which has raised the price of Subsys every year since its launch, sold $74.2 million worth of the drug in New Jersey between 2012 and the third-quarter of 2016.

The State's lawsuit alleges corporate decision-makers devised a strategy to expand what they recognized as a limited market for Subsys by aggressively pushing "off label" uses of the drug - even to podiatrists and other specialty practitioners who typically would have little call to prescribe powerful Schedule II painkillers.

Off-label use denotes use of a drug for purposes other than that for which it was approved by the FDA. Based on their independent medical judgment, physicians have discretion to legally prescribe drugs for off-label use. However, drug companies are prohibited from promoting their products for such uses in an untruthful or misleading way, and influencing healthcare provider's prescription decisions with payments and other benefits.

"Insys made tens of millions of dollars in sales in New Jersey," said Porrino. "Clearly, raking in more money was the engine that drove this subversive and illegal plan to push a potent and, in the wrong patient, potentially lethal form of fentanyl to a broader audience. As we explicitly claim in our lawsuit, Insys and its leadership were willing to do whatever was necessary to make Subsys successful."

Packed in a single-dose spray device intended for oral administration, Subsys is a transmucosal, immediate-release formulation of fentanyl. In the drug's first year on the market, a one-month supply of the lowest available strength of Subsys - 100 mcg doses - cost approximately $2,800. By 2015, the price of the same supply had spiraled to more than $4,000. The State's lawsuit alleges that Insys regularly misled health insurance plans and pharmaceutical benefits managers to help secure coverage for Subsys prescriptions.

Specifically, the complaint charges, Insys representatives used or developed false records - including false diagnoses of cancer, breakthrough cancer pain and other afflictions - to help lock in pre-authorization approvals and ensure paid reimbursement claims.

The complaint alleges that Insys representatives went so far as to conceal the company's telephone number from benefits managers and insurers so those entities would not be aware that it was Insys Reimbursement Center employees - calling directly from Insys - in an effort to obtain insurance reimbursement approvals for prescriptions of Subsys.

The suit also alleges that Insys routinely misled consumers by, among other things, making false representations that doctors and other prescribers were prescribing Subsys on the basis of their unbiased, independent clinical judgment when, in fact, that clinical judgment had been "co-opted based on Insys's unlawful payment of kickbacks to prescribers."

More than 840 people in New Jersey died from heroin or opioid abuse in 2010 and according to the State's lawsuit, the confirmed heroin/opioid death toll in New Jersey jumped to more than 1,000 in the first half of 2016 alone (with projections of 2,000 deaths or more by year's end.) At the same time, the complaint asserts, the number of people admitted to state-licensed or certified substance abuse treatment programs in New Jersey due to abuse of heroin or other opiates increased from about 33,000 in 2012 to more than 38,000 in 2016.

The complaint further points out that, according to the National Institute of Drug Abuse, 80 percent of new heroin users began their addictions by misusing prescription pain medications. It also notes that opiate-related deaths in the U.S. have more than quadrupled since 1999, according to the national Centers for Disease Control.

"As we allege, The fact that Insys was unlawfully flooding the market with a fentanyl product 50 times stronger than heroin and 100 times more potent than morphine seems not to have troubled the company at all," Porrino said. "Nor, it appears, was it bothered by the notion that such a strategy could contribute to, and exacerbate, the grave opiate crisis being confronted by New Jersey and every other state. Insys launched a business plan that we allege was propelled by titanic greed and corporate irresponsibility, and we're committed to holding them accountable for it."

Assistant Attorney General John M. Falzone and Deputy Attorneys General from the Division of Law's Government and Healthcare Fraud Section -- including Section Chief Janine N. Matton, and Deputy Attorneys General Lara J. Fogel and Evan A. Showell - handled the Insys matter on behalf of the State.