Ex-Insys CEO to plead guilty to opioid kickback scheme

BOSTON (Reuters) – The former chief executive of Insys Therapeutics Inc (INSY.O) has agreed to plead guilty to participating in a scheme to bribe doctors to prescribe a powerful opioid medication sold by the company, U.S. prosecutors said on Wednesday.

Michael Babich, who resigned as the Arizona-based drugmaker’s CEO in 2015 and was due to face trial next month, has agreed to plead guilty to conspiracy and mail fraud charges, federal prosecutors in Boston disclosed in a court filing.

Five former Insys executives and managers indicted alongside Babich including John Kapoor, the company’s onetime billionaire founder and former chairman, remain scheduled to go on trial in late January. They have pleaded not guilty.

The terms of Babich’s plea deal were not disclosed, and it was unclear whether he would agree to cooperate with prosecutors and testify at that trial as another former Insys executive who recently pleaded guilty did.

A lawyer for Babich did not immediately respond to a request for comment.

The case, brought in the midst of a national opioid addiction epidemic, centers on Subsys, Insys’ under-the-tongue spray for managing pain in cancer patients. It contains fentanyl, an opioid 100 times stronger than morphine.

Prosecutors allege that from 2012 to 2015, Kapoor, Babich and others conspired to bribe doctors to prescribe Subsys and to defraud insurers into paying for it.

Prosecutors also allege that Insys executives conspired to bribe doctors by paying them fees to participate in speaker programs ostensibly meant to educate medical professionals about Subsys that were actually shams.