Mimesis Law
24 January 2017

Big Pharma Execs Indicted For Racketeering, Finally

December 13, 2016 (Fault Lines) – Between drug-ravaged parking lots in small town West Virginia and a quiet commercial park in Arizona, there runs a common thread. Opiate abuse. But while you may see drug busts sweeping up the local druggies for possession charges, nobody in that office park is probably spending much time worrying about the cops busting down their doors. Until an indictment last week sent a resounding message to the pharmaceutical industry.

According the Centers for Disease Control and Prevention, people who abuse opioid prescription painkillers are 40 times more likely to abuse heroin. Where some see tragedy, others see profits. All those drug addicts need to buy drugs somewhere, and plenty of profiteers are ready to step in and provide that service. Only it’s not just foreign cartels peddling death in a pill, or a powder, or a needle, or however else one might be able to get high.

These powerful drugs are doing a whole lot more than relieving pain. They are fueling an addiction that affects nearly everyone in our country. If it’s not just drug cartels that are responsible for this addiction, who else can we look to?

One of the deadliest drugs in this whole mix is fentanyl. First manufactured in the 1950s as a safer and better alternative to painkillers like morphine, fentanyl is an incredibly powerful synthetic opioid.

Fentanyl is the strongest opioid approved for medical use in the United States, rated as 50 to 100 times more potent than morphine and 30 to 50 times more potent than heroin, according to the National Institute for Drug Abuse.

From homeless heroin addicts to pop stars like Prince, fentanyl isn’t picky about who it kills.

“The epidemic spares no one,” [Executive Director of the American College of Medical Toxicology Paul] Wax said. “It affects the wealthy, the poor, the prominent and not prominent. That’s the nature of an epidemic.”

And behind that epidemic is a suspect that appears more and more often in connection with the painkiller epidemic: the pharmaceutical industry. Big Pharma is all about the drug business, and business is good…to the tune of about $24 billion worldwide. Of that number, 80% is spent in America, since Americans consume most of the world’s supply of painkillers.

That market has become increasingly crowded, as pharmaceutical companies see the enormous profits reaped from a public that thinks anything and everything can be fixed with a pill. And a public that likes to get high. As companies look for an edge, they end up with billions of reasons to cheat.

Since Big Pharma hires lobbyists instead of hit men, the federal government has little trouble turning a blind eye to drug dealers dressed up like millionaire pharmaceutical executives.

Or at least it did. After last week, serious cash may not be the only driving force in the pharmaceutical industry. Perhaps the sound of prison cell bars clanging shut will have an effect on business practices. And while prosecution isn’t well-suited to solve most of our problems, this wake-up call from the Department of Justice may be just what the pharmaceutical industry and its victims customers needed.

Last week, the Department of Justice indicted 6 executives from a company called Insys Therapeutics. Insys is best known for a drug called Subsys, a fentanyl spray that sends a dose of the powerful painkiller directly to the user’s system in minutes. Designed for breakthrough pain suffered by cancer patients, the drug has noble intentions. Insys execs, on the other hand, don’t. The cancer market would be extremely profitable.

While details about this breakthrough cancer pain medication are hard to find, or at least ones that are not self-serving management hype, veteran sales staff members from Insys and other pharmaceutical firms projected the company’s future growth rate to be roughly 10 percent a year. If this ends up being the case and the company is selling to oncologists, then the growth possibilities for Insys should be a function of that plus whatever business it can take away from its larger competitors. Many companies would be happy for those odds.

But that cancer market wasn’t enough. Insys’ revenue nearly doubled on the sales of its fentanyl product. And apparently that caught the feds’ attention. The indictment lays out a scheme that involves two broad crimes: fraud and bribery.

The fraud accusations stem from lying to insurance companies about the need for fentanyl.

…Subsys is not approved for use in people who don’t have cancer. Among the allegations made by federal prosecutors is that Insys employees lied, telling insurers patients had cancer when they did not in order to get the insurer to pay.

In fact, the company had employees whose job was to figure out how to get insurance companies to pay for fentanyl prescriptions.

The bribery accusations reveal a typical pharmaceutical sales pattern taken too far.

…the indictment contains more evidence about plans to pay doctors and nurse practitioners to convince them to prescribe Subsys. The method for this is a common pharmaceutical industry practice of paying doctors to give scientific talks to their peers in order to increase prescribing for a drug. In this case, the prosecutors allege, the money given for the talks was solely there as a reward for prescribing Subsys. Prosecutors go through ten different prescribers, all roughly matching the same pattern.

The speaking engagements were, according to prosecutors, sham events attended by office staff or friends. But they were definitely lucrative, paying as much as a quarter of a million dollars or more over a few years’ time. Reports of texts between the company and doctors sound more like mafia loyalty oaths than a corporate-medical relationship.

Which brings up a good point. The charges against Insys are racketeering charges. The federal RICO statute was originally designed to go after the mafia and other organized crime. As those criminal syndicates became more sophisticated, regular prosecutions simply weren’t cutting it. The idea behind RICO was to go after the business aspects of organized crime.

The pharmaceutical industry is certainly organized. As time goes on, its seems to be getting a lot more criminal. The numbers alone reflect an industry creating problems rather than solving them. The incredible amount of painkiller prescriptions is not in response to any epidemic of pain that just hit us out of nowhere. They are in response to the immense profits to be made from the drugs.

Street dealers know that creating addicts results in a steady stream of demand to match their supply. It’s a shitty way to do business, but it works. For dollar crack deals just as well as fancy prescription drugs.

Maybe it will turn out the Insys executives didn’t commit any crimes. But it will be interesting to see how they defend their business practices. People in those corporate office parks might want to be a little more careful.

5 Comments on this post.

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  • DawnDay
    13 December 2016 at 1:04 pm - Reply

    You nailed it on this one, Josh. I am a former pharmaceutical sales rep of a class 2 narcotic. That experience forever changed the way I view the entire industry. Everything you wrote is true, based upon my experiences and how I “sold” my drug. There are other steps the gov could take to curb this. Start with banning pharmacies from selling prescription data. That is how the manufacturer/pharmaceutical co. knows which doctors to target. A surprising small number of doctors prescribe the majority of drugs in a particular category, and all that information is for sale.

  • Dwight Mann f/k/a “dm”
    13 December 2016 at 1:50 pm - Reply

    “Off label” prescribing, prescribing drugs for uses beyond what they were specifically approved by the FDA, is commonplace in the medical field. I don’t see any suggestion that a spray version of fentanyl is somehow improper for use in any other circumstance where fentanyl is the appropriate prescription. Additionally, insurance companies have the option of covering prescriptions even when prescribed off label. I suspect that this spray version of fentanyl is under patent and thereby substantially more expensive than other forms and a reason why insurers do not want to pay for it except under the most exceptional circumstances (and fair enough for trying to keep medical cost under control).

    If, as alleged, Insys lied about patients having cancer in order to cause insurers to cover the cost of the medication then fraud charges are certainly appropriate. However, the “opioid epidemic” runs straight into the epidemic of chronic pain sufferers who are undertreated by their doctors who fear that undereducated goons with badges that say “DEA” are going to try to have their medical licenses revoked and/or imprison them even when treating the legitimate needs of their patients.

  • Mark W. Bennett
    13 December 2016 at 2:32 pm - Reply

    I wonder when the docs will get charged for all the phony “speaking engagements” they take bribes for?

  • JJ
    15 December 2016 at 12:39 am - Reply

    Love the inclusion of the 80% statistic as part of the discussion of the “opiate epidemic”, like the situation is that pain is overtreated in America instead of just even more severely undertreated in the rest of the world. Maybe it’s a little too easy to get the lowest level opiate prescriptions for minor conditions, and that’s a policy debate worth having, but when it comes to severe pain and serious conditions that require something stronger than acetaminophen combo products, it’s undertreated terribly and causes enormous suffering.

    Love the drug war cheerleading even more. Moral issues of drug abuse aside, the overwhelming majority of the danger and harm comes when the abuse leaves the medical setting, because of being underprescribed or cut off entirely based only on fear of the DEA rather than a legitimate medical case. And of course conflating medical fentanyl products with “fentanyl” like what actually killed Prince, i.e. not even fentanyl but an analog in a powder or home pressed pill off the streets of unknown purity, then proceed as if the fairly small amount of medical fentanyl prescriptions, almost exclusively given to those already strongly tolerant to high doses of drugs like oxycodone, has any substantial effect on the “opiate epidemic”. The very existence of dangerous exotic analogs of course is caused exclusively by lack of access to the safer, real products.
    And speaking of analogs, I thought precision mattered? It’s not the strongest opioid approved for medical use, just the strongest one given as an outpatient prescription (NIDA’s statement, of course unchallenged). But what can I expect when almost everything else in the article is just directly quoting and parroting drug warriors too, and the ostensible subject of the article, Insys’s alleged crime, would be illegal no matter what drug they did it with- but no, let’s just propagate opiate hysteria instead and relegate that to tail end of the article.

  • albeed
    16 December 2016 at 12:26 am - Reply

    “Insys’s alleged crime, would be illegal no matter what drug they did it with- but no, let’s just propagate opiate hysteria instead and relegate that to tail end of the article.”

    What JJ said was so true.

    “The speaking engagements were, according to prosecutors, sham events attended by office staff or friends.”

    True fraud is true fraud, but it must be demonstrated beyond a reasonable doubt. I do not trust press releases by LE agents at all.

    What I know with absolute certainty (along with the overall permissible practices in the drug industry), was that my mother spent the last four years of her life on a fentanyl patch. She suffered immensely from severe arthritic deterioration of her spine. This was the only drug, after trying many other therapies, that gave her a meaningful quality of life in her last years. I also remember the hesitation in the prescribing of the fentanyl patch due to the regulatory monitoring in prescribing these narcotics.

    I would have shot anyone who would have taken this pain management method away from her.

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