Ex-Insys sales manager arrested in U.S. fentanyl-kickback case

September 29, 2016 1:24 PM EDT

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By Nate Raymond

(Reuters) - A former Insys Therapeutics Inc district sales manager was arrested on Thursday on charges he participated in a scheme to pay kickbacks to doctors to prescribe a drug containing the opioid fentanyl, U.S. prosecutors said.

Jeffrey Pearlman, 49, was charged in a criminal complaint filed in federal court in New Haven, Connecticut, becoming the latest individual to face prosecution in connection with probes involving Insys' drug Subsys.

Prosecutors did not identify Insys by name, but a LinkedIn profile for Pearlman showed he worked at Insys from 2012 to 2015, and the description of his employer by authorities matched that of the Arizona-based pharmaceutical company.

Following his arrest, Pearlman was released after a court hearing on a $200,000 bond, prosecutors said.

Scott Resnik, a lawyer for Pearlman, said his client "intends to defend against the current charges and looks forward to having his case adjudicated in the court system."

An Insys spokeswoman did not respond to requests for comment.

The charges come as Insys faces a number of state and federal investigations involving Subsys as U.S. authorities seek to combat a national epidemic of opioid abuse.

Subsys, launched in 2012, is a spray approved for managing pain in cancer patients that contains fentanyl, a highly addictive and regulated synthetic opioid. It generated $329.5 million in net revenue in 2015.

Prosecutors said Pearlman and sales representatives he managed induced doctors, advanced practice registered nurses and physicians' assistants to prescribe Insys' fentanyl spray by paying them to participate in sham "speaker programs."

Speaker fees ranged from $1,000 to several thousands of dollars, prosecutors said. One Connecticut healthcare provider who participated in these sham programs earned $83,000 in kickbacks to prescribe Insys' fentanyl spray, prosecutors said.

As a result of the scheme, federal healthcare programs incurred millions of dollars in losses, prosecutors said.

The case is the latest against an individual tied to Insys and Subsys.

In June, federal prosecutors in Manhattan brought charges against two former Insys employees, Jonathan Roper and Fernando Serrano, for engaging in a similar kickback scheme involving speaker fees. They have pleaded not guilty.

In August, Illinois' attorney general sued Insys, accusing it of deceptively marketing and selling Subsys to doctors for off-label uses. That lawsuit remains pending.

Insys shares fell 5 percent to close at $12.08 on Nasdaq.

(Reporting by Nate Raymond in New York; Editing by Matthew Lewis and Richard Chang)



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