U.S. Joins Whistleblower Suits Against Opioid Maker

The U.S. Justice Department threw its weight behind a series of whistleblower lawsuits that allege Insys Therapeutics paid kickbacks to encourage doctors to prescribe an opioid drug to their patients.

The news, which the department announced Tuesday, added to the legal and financial pressure that has piled up against the company and its former staff. Its ex-chief executive officer, John Kapoor, and several former top executives have been charged with conspiracy to illegally distribute Subsys, a mouth-spray form of fentanyl that is approved by the Food and Drug Administration to treat cancer-related pain. Mr. Kapoor has denied wrongdoing and pleaded not guilty.

The stock has lost 85% of its value since its peak in mid 2015. Shares of Insys fell 6% on Tuesday.

Insys said it had set aside $150 million, adding that it is the minimum amount it expects to pay out over five years. The company described itself as having “completely transformed” its culture in the five years since it learned that the Justice Department had begun an investigation.

A complaint unsealed Monday, consolidating five separate whistleblower suits, alleged that in addition to paying kickbacks to prompt doctors and nurses to prescribe Subsys, Insys encouraged doctors to prescribe the drug for patients who didn’t have cancer. The complaint claimed that Insys staff lied to insurers about patients’ diagnoses to obtain reimbursements from government insurance programs.

The matter dates back to 2013, when Maria Guzman, a former sales representative for Insys, filed a suit under the False Claims Act, a Civil War-era law that allows people who believe the U.S. has been defrauded to file suit on behalf of the government. They receive a share of whatever funds are collected as a result.

The government has a right to take over responsibility for the cases, as it did in the Insys matter.

The law allows the U.S. to recover up to three times the amount the government lost due to fraudulent claims, plus civil penalties.

“Sex, money, luxury items—nothing was out of bounds in Insys’s efforts to persuade doctors to prescribe Subsys without consideration of what was best for patients,” Ms. Guzman said in a statement from one of the law firms that represented her. “I could not keep silent, knowing how these off-label prescriptions endangered so many.”

The Justice Department said some criminal cases it has pursued in connection with the matter have resulted in convictions or guilty pleas, while others are pending.

The Wall Street Journal | May 15, 2018