Former Regional Sales Director for Insys Therapeutics Sentenced for Racketeering Conspiracy

Allegations were made that INSYS used a variety of fraudulent schemes to promote and sell their medication, Subsys, a powerful narcotic intended to treat cancer patients suffering intense episodes of breakthrough pain. In 2016, RAC Rob Bosken (51MA) joined an ongoing criminal investigation into INSYS. INSYS obtained a contract with VA that allowed VAMC doctors to prescribe Subsys. According to data obtained during the investigation, no Subsys prescriptions were written by VAMC doctors under this contract. However, CHAMPVA paid INSYS approximately $3,317,165 for Subsys prescriptions written to CHAMPVA eligible members. The investigation determined that INSYS’s upper management, including former national sales director Richard SIMON and former regional sales director Joseph ROWAN, led a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe Subsys and defraud healthcare insurers. In exchange for using speaker fees as bribes and kickbacks, practitioners wrote large numbers of prescriptions for patients, most of who were not diagnosed with cancer. Through the creation of an INSYS reimbursement center, the now former corporate executives also conspired to mislead and defraud health insurance providers. INSYS’s reimbursement center used a variety of fraudulent reimbursement schemes to obtain payment authorization from insurers and Pharmacy Benefit Managers. These schemes were used to defraud insurers and PBMs who were reluctant to approve payment for Subsys when it was prescribed off-label. As a result of this investigative effort, SIMON, ROWAN, and six other former INSYS employees, including the founder and majority owner John KAPOOR, were criminally charged with RICO conspiracy. Leading up to trial, three defendants pled guilty and agreed to cooperate with the government. These defendant cooperators included INSYS’s former chief executive officer Michael BABICH and former vice president of sales Alec BURLAKOFF. SIMON, ROWAN, and three additional defendants’ criminal trials started on January 28, 2019, in Boston, MA. On May 2, 2019, after 15 days of deliberation, the jury found SIMON, ROWAN, and three other defendants guilty of RICO conspiracy, among other charges. On January 21, 2020, SIMON was sentenced to 33 months in prison and three years of supervised release, and ordered to pay a restitution amount that has yet to be determined and $2.3 million in forfeiture. On January 21, 2020, ROWAN was sentenced to 27 months in prison and three years of supervised release, and ordered to pay a restitution amount that has yet to be determined, and $2 million in forfeiture. This investigation was conducted jointly with the FBI, HHS OIG, DEA, FDA OCI, USPS OIG, USPIS, DCIS, OPM OIG, and DOL. RAC Bosken testified at trial. SA Larry McDonald (51PX) assisted the investigation through surveillance and with a civil False Claims Act investigation of INSYS (2017-01639-IW-0094), which was globally settled in June 2019.