Insys to pay $150M to settle opioid kickback probe

(Reuters) — Insys Therapeutics Inc. on Wednesday said 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.

The tentative deal announced by the Arizona-based drugmaker marked a major step in Insys' efforts to resolve an investigation that has led to several former executives and doctors being criminally charged, including billionaire 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.

Terms of the agreement in principle require Insys to pay $150 million over five years, with potential additional payments of up to $75 million, the drugmaker said.

"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 CEO Saeed Motahari said in a statement.

Insys' share price was $7.23 in premarket trading, up 8.7%.

The deal came amid a wave of related criminal cases centered on Subsys against medical practitioners and former executives and sales representatives employed by Insys.

More than a dozen former Insys executives or employees have faced criminal charges, including Mr. Kapoor and former CEO Michael Babich, who along with five other former executives or managers were charged in an indictment filed in federal court in Boston.

Prosecutors say Mssrs. Kapoor and Babich and others conspired since 2012 to pay bribes to doctors to prescribe Subsys and sought to defraud insurers into paying for the medication. They have pleaded not guilty to racketeering conspiracy and other charges.

In May, the Justice Department intervened in five whistleblower lawsuits accusing Insys of paying kickbacks and engaging in other illegal practices to promote Subsys.

The department at that time said its action was part of its effort to combat the U.S. opioid epidemic. In 2016, 42,000 people died from opioid overdoses, according to U.S. Centers for Disease Control and Prevention.