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By Tom Winter and Janelle Griffith
The former CEO of a drug company that produced a powerful and addictive painkiller containing fentanyl for cancer patients has agreed to plead guilty in connection with a scheme in which the firm’s leaders bribed doctors in return for their prescribing the drug, court documents filed Wednesday show.
Michael Babich, a former president and CEO of the Arizona-based Insys Therapeutics Inc., producer of the drug Subsys, will plead guilty to one count of conspiracy and one count of mail fraud for his role in the alleged conspiracy, according to court documents.
Insys executives allegedly defrauded insurance companies through their actions because the insurance providers made payments to doctors without knowledge of the bribes and kickbacks, according to court documents filed by Andrew Lelling, the U.S. Attorney for Massachusetts.
“The bribes and kickbacks took multiple forms,” the prosecutor’s motion filed Wednesday states. Babich and other company executives allegedly paid doctors fees that were purportedly for speaking engagements. They also allegedly hired and paid the salaries of some office staff for “certain targeted practitioners.”
Previously, in November, the former head of sales for Insys, Alec Burlakoff, pleaded guilty to his role in the conspiracy and agreed to cooperate with prosecutors.
At the time, he was the highest-level executive to admit wrongdoing in the federal investigation of the company’s billionaire founder, John Kapoor, and other co-defendants who have pleaded not guilty.
Insys agreed to pay $150 million to settle related claims in August.
In June 2017, Patty Nixon, an Insys sales representative-turned-whistleblower, told NBC News how the company lured doctors into prescribing the drug for patients who did not need it. Nixon said she was fired after she stopped showing up for work because of the guilt she felt about lying.
The Justice Department is seeking a Jan. 9 plea hearing, and aims to forfeit $3.5 million in cash it has already seized from Babich.