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Insys in talks with US to resolve probe of opioid spray

May 9, 2017

Insys Therapeutics Inc’s chief executive said on Tuesday it was working to resolve a U.S. Justice Department probe, after prosecutors accused several former executives of leading a scheme to bribe doctors to prescribe a fentanyl-based pain medication.

Saeed Motahari, who took over as the Arizona-based drugmaker’s CEO just over three weeks ago, told analysts on an earnings call that Insys has been working to improve its compliance practices and was focused on resolving the probe.

“We continue to engage in discussions with the DOJ and remain highly committed to resolving this matter,” Motahari said.

Motahari’s comments came as Insys reported a 40.4 percent decline in quarterly revenue, which was hurt by a fall in demand for Subsys, an under-the-tongue spray containing the synthetic opioid fentanyl that is the subject of the probe.

As U.S. 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.

Insys said net revenue totaled $36 million for the first quarter ending March 31, compared with $60.4 million for the same period in 2016. The drop came amid a 32 percent decline in prescriptions for Subsys since the fourth quarter.

Darryl Baker, the company’s chief financial officer, attributed the decline to “ongoing and heightened publicity” given to the national opioid epidemic, as well as the investigations related to Subsys.

Federal prosecutors in Boston in December announced charges against several former Insys executives and managers, including former CEO Michael Babich, in connection with a scheme to bribe doctors to prescribe Subsys.

Babich and his five co-defendants have all pleaded not guilty. Besides that case, federal charges have also been filed in four states against at least five other ex-Insys employees.

Insys has also faced investigations by several state attorneys general. 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 in August 2015. More recently, Insys in January agreed to pay $3.4 million to resolve an investigation by New Hampshire’s attorney general.

In announcing earnings on Tuesday, Insys reported a net loss of $6.5 million or 9 cents per share in the first quarter, compared with a profit of $2.3 million or 3 cents per share a year earlier.


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