Insys, the Opioid Drug Maker, to Pay $225 Million to Settle Fraud Charges

The opioid manufacturer Insys Therapeutics agreed to pay $225 million to settle federal criminal and civil charges that it illegally marketed a highly addictive fentanyl painkiller to doctors, federal prosecutors said on Wednesday.

As part of the deal, a subsidiary of Insys will plead guilty to five counts of mail fraud and the company will pay a $2 million fine and $28 million in forfeiture, according to a statement from the United States attorney’s office in Massachusetts. The company will also pay $195 million to settle allegations that it violated the federal False Claims Act, which involves defrauding the federal government through drug sales to health care programs like Medicare.

A month ago, a federal jury in Boston found the company’s top executives, including the founder, John Kapoor, guilty of conspiring to fuel sales of the drug, Subsys, by bribing doctors and misleading insurance companies.

Insys said in a statement that it believed the settlement was in the best interest of the company and its stakeholders.

The prosecution of Insys and its executives provides the latest example of the federal government’s recent crackdown on drug makers and others as it seeks to hold them accountable for the nation’s opioid epidemic, which has led to more than 200,000 overdoses in the past two decades.

Dozens of states are suing opioid manufacturers and distributors over their roles in the crisis, with some — including the state attorneys general of New York and Massachusetts — showing a willingness to go after individuals, like members of the Sackler family who own Purdue Pharma, the maker of OxyContin.

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On Wednesday, prosecutors said Insys’ egregious behavior required action. “For years, Insys engaged in prolonged, illegal conduct that prioritized its profits over the health of thousands of patients who relied on it,” Andrew E. Lelling, the United States attorney for the District of Massachusetts, said in a statement. “Today, the company is being held responsible for that and for its role in fueling the opioid epidemic.”

Prosecutors said that from August 2012 to June 2015, Insys used phony “speaker programs” to spread the word about its newly approved product, Subsys, which is a form of fentanyl that is sprayed under the tongue. The powerful painkiller was approved only for use in patients with cancer who were already using round-the-clock opioids, but the company quickly began marketing the product to a broader range of patients, prosecutors said, and used lavish dinners and other events to entice doctors to prescribe more of its product.

The prosecutors cited one example of a physician assistant in New Hampshire who did not write any prescriptions for Subsys until after May 2013, when he joined the company’s speaker program. After joining the speaker program, he wrote 672 Subsys prescriptions and was paid $44,000 from Insys, which prosecutors said amounted to illegal kickbacks.

The company’s legal troubles have battered its financial outlook, and in May, Insys told investors that its legal costs might force it into bankruptcy. One year ago, Insys stock was trading at about $7; when the markets closed on Wednesday — before news of the settlement — shares were trading at 86 cents.