Arrests Could Draw More Scrutiny From Senator Claire McCaskill
State attorneys general and other lawmakers are investigating the role Insys and other opioid distributors played in the opioid crisis. To parse through drug makers’ potential role Senator Claire McCaskill requested information from Teva (TEVA), Mallinckrodt (MNK), Allergan (AGN) and Endo (ENDP), among others. In September, McCaskill detailed how Insys Therapeutics spiked approval of subsys for inappropriate off-label use:
“There is extensive evidence that Insys aggressively pressured its employees and the entire medical system to increase the use of a fentanyl product during a national epidemic that was taking the lives of tens of thousands of Americans a year in order to make more money—it’s hard to imagine anything more despicable,” McCaskill said. “Their attempts to manipulate the prescription approval process for this drug appear to have been systemic, and anyone responsible for this manipulation deserves to be prosecuted.”
As part of its investigation, the minority staff received an audio recording of conversations between an Insys employee and pharmacy benefit manager representatives related to a Subsys prescription for Sarah Fuller, who later died from an alleged fentanyl overdose. This recording suggests the Insys employee in question repeatedly misled Envision Pharmaceutical Services to obtain approval for Ms. Fuller’s Subsys treatment—heavily implying she was employed by the prescribing physician and misrepresenting the type of pain the patient was experiencing.
Dr. Rosenberg’s recent admission that he prescribed fentanyl in exchange for kickbacks from Insys could bolster McCaskill’s investigation. If additional doctors testify under oath to taking kickbacks from Insys it could prompt McCaskill to take additional action. Such action(s) could involve fines and penalties in addition to any potential payouts under the DOJ investigation.
Conclusion
The recent arrests of doctors for subsys kickbacks could put Insys at risk. If more doctors turn against the company it could trigger fines and penalties from the DOJ and/or potential fines and penalties pursuant to Senator McCaskill’s investigation. Will $163 million in cash in securities be enough to cover Insys’s potential legal exposures? I rate INSY a sell.
