Biotech and Pharma

Former Insys employees charged in doctor kickback scheme

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Two former employees of Insys Therapeutics, Jonathan Roper and Fernando Serrano, were arrested on Thursday for allegedly participating in kickback schemes involving doctors who prescribed the company's main drug, Subsys, a pain medication containing fentanyl.

Headlines linking Prince's death to a fentanyl overdose have raised the profile of the opioid; however, CNBC has previously reported on the dangers of these highly addictive drugs and the alleged illegal tactics some pharmaceutical companies have employed to drive sales.

These include allegations against specialty pharmaceutical company Insys, whose market cap is down about a billion dollars since last year. Company officials weren't immediately available to comment on the charges against Roper and Serrano.

According to the Food and Drug Administration, Subsys has only one indication. It's meant for late-stage cancer patients with breakthrough pain, however, Insys has been accused of trying to push the drug far beyond cancer patients by convincing doctors to prescribe it for patients who have migraines or even minor neck or back pain.

According to physicians and experts, Subsys is about 100 times more powerful than morphine.

Roper and Serrano were charged with violating an anti-kickback statute, "in connection with their participation in a scheme to pay doctors thousands of dollars to participate in sham educational programs in order to induce the doctors to prescribe millions of dollars' worth of a fentanyl-based sublingual spray" the company manufactured.

A drug company making millions off your pain
A drug company making millions off your pain

In 2014 alone, these former employees paid one doctor $147,000 and another doctor $112,000 in speaker program fees. These two doctors, during the same time period, were also two of the largest prescribers of the drug in the U.S., according to a press release from Preet Bharara, the U.S. Attorney for the Southern District of New York.

CNBC first reported about these alleged kickback schemes and educational programs, known as speaker fees, in November 2015.

The arrest is part of a bigger question about why so many Americans are addicted to prescription painkillers and what continues to fuel the opioid epidemic, Bharara said in the release.

"As alleged, Roper and Serrano helped feed this devastating surge of opioid addictions by tapping into another age-old addiction, greed," he said.

About 28,000 people died from opioid addiction in 2014, half from painkiller prescriptions, the highest number on record, according to the Centers for Disease Control and Prevention.

Subsys, sprayed under the tongue, is the only drug Insys currently has on the market, and it raked in about $330 million in revenue in 2015 alone.

Insys stock is down 47.5 percent year to date and about 56 percent in the last twelve months.