By Nate Raymond
(Reuters) - Six former Insys Therapeutics Inc executives and managers were arrested on Thursday on charges they engaged in a nationwide scheme to bribe doctors to unnecessarily prescribe a drug containing the opioid fentanyl, U.S. prosecutors said.
Michael Babich, the Arizona-based drugmaker's former chief executive officer, and others were charged with participating in a conspiracy in which bribes were disguised as marketing event and speaker fees.
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The case is the latest involving Subsys, a spray approved for managing pain in cancer patients that contains the synthetic opioid fentanyl, as authorities try to stem a nationwide epidemic of opioid abuse.
The indictment filed in federal court in Boston said beyond the bribes, Babich and another defendant also created a scheme to mislead insurers, which were reluctant to pay for Subsys for patients without cancer.
Shares of Insys were down 11.87 percent, or $1.27, to close at $9.43 on the NASDAQ on Thursday. Insys said it is cooperating in various investigations and is committed to complying with laws and regulations governing its products and business.
Babich's attorney, Wick Sollers, said Babich would plead not guilty when he is arraigned at a later date to charges that include conspiracy to commit racketeering.
Others charged included Alec Burlakoff, an ex-vice president of sales; Richard Simon, a former national sales director; former regional sales directors Sunrise Lee and Joseph Rowan; and Michael Gurry, a former vice president of managed markets.
Anthony Pacheco, Rowan's lawyer, called the allegations "unproven." Attorneys for Gurry and Burlakoff did not respond to requests for comment. Lawyers for the other defendants could not be identified.
As authorities have sought to combat opioid abuse, Subsys has become the subject of several federal and state investigations amid allegations that the drug was marketed and sold to non-cancer patients.
"I hope that today's charges send a clear message that we will continue to attack the opioid epidemic from all angles, whether it is corporate greed or street-level dealing," said U.S. Attorney Carmen Ortiz of Boston.
The case followed charges filed in Massachusetts, New York, Connecticut and Alabama against at least five other former Insys employees.
In August, Illinois' attorney general sued Insys, accusing it of deceptively marketing and selling Subsys to doctors for off-label uses. That lawsuit followed a $1.1 million settlement with Oregon's attorney general resolving similar claims.
The case is U.S. v. Babich et al, U.S. District Court, District of Massachusetts, No. 16-cr-10343.
(Reporting by Nate Raymond in New York; Editing by Bill Trott, Lisa Shumaker and Andrew Hay)