The Opioid that Made a Fortune for Its Maker — and for Its Prescribers - The New York Times
For Insys, Chun was just the right kind of doctor to pursue. In the late 1990s, sales of prescription opioids began a steep climb. But by the time Subsys came to market in 2012, mounting regulatory scrutiny and changing medical opinion were thinning the ranks of prolific opioid prescribers. Chun was one of the holdouts, a true believer in treating pain with narcotics. He operated a busy practice, and 95 percent of the Medicare patients he saw in 2015 had at least one opioid script filled. Chun was also a top prescriber of a small class of painkillers whose active ingredient is fentanyl, which is 50 to 100 times as powerful as morphine. Burlakoff’s product was a new entry to that class. On a “target list,” derived from industry data that circulated internally at Insys, Chun was placed at No. 3. The word inside the company for a doctor like Chun was a “whale.”
In the few months since Subsys was introduced, demand was not meeting expectations. Some of the sales staff had already been fired. If Burlakoff and Krane could persuade Chun to become a Subsys loyalist, it would be a coup for them and for the entire company. The drug was so expensive that a single clinic, led by a motivated doctor, could generate millions of dollars in revenue.
Speaker programs are a widely used marketing tool in the pharmaceutical business. Drug makers enlist doctors to give paid talks about the benefits of a product to other potential prescribers, at a clinic or over dinner in a private room at a restaurant. But Krane and some fellow rookie reps were already getting a clear message from Burlakoff, she said, that his idea of a speaker program was something else, and they were concerned: It sounded a lot like a bribery scheme.
But the new reps were right to be worried. The Insys speaker program was central to Insys’ rapid rise as a Wall Street darling, and it was also central to the onslaught of legal troubles that now surround the company. Most notable, seven former top executives, including Burlakoff and the billionaire founder of Insys, John Kapoor, now await trial on racketeering charges in federal court in Boston. The company itself, remarkably, is still operating.
The reporting for this article involved interviews with, among other sources, seven former Insys employees, among them sales managers, sales reps and an insurance-authorization employee, some of whom have testified before a grand jury about what they witnessed. This account also draws on filings from a galaxy of Insys-related litigation: civil suits filed by state attorneys general, whistle-blower and shareholder suits and federal criminal cases. Some are pending, while others have led to settlements, plea deals and guilty verdicts.
The opioid crisis, now the deadliest drug epidemic in American history, has evolved significantly over the course of the last two decades. What began as a sharp rise in prescription-drug overdoses has been eclipsed by a terrifying spike in deaths driven primarily by illicitly manufactured synthetic opioids and heroin, with overall opioid deaths climbing to 42,249 in 2016 from 33,091 in 2015. But prescription drugs and the marketing programs that fuel their sales remain an important contributor to the larger crisis. Heroin accounted for roughly 15,000 of the opioid deaths in 2016, for instance, but as many as four out of five heroin users started out by misusing prescription opioids.
By the time Subsys arrived in 2012, the pharmaceutical industry had been battling authorities for years over its role in promoting the spread of addictive painkillers. The authorities were trying to confine opioids to a select population of pain patients who desperately needed them, but manufacturers were pushing legal boundaries — sometimes to the breaking point — to get their products out to a wider market.
Even as legal penalties accrued, the industry thrived. In 2007, three senior executives of Purdue Pharma pleaded guilty in connection with a marketing effort that relied on misrepresenting the dangers of OxyContin, and the company agreed to pay a $600 million settlement. But Purdue continued booking more than $1 billion in annual sales on the drug. In 2008, Cephalon likewise entered a criminal plea and agreed to pay $425 million for promoting an opioid called Actiq and two other drugs “off-label” — that is, for unapproved uses. That did not stop Cephalon from being acquired three years later, for $6.8 billion.
Subsys and Actiq belong to a class of fentanyl products called TIRF drugs. They are approved exclusively for the treatment of “breakthrough” cancer pain — flares of pain that break through the effects of the longer-acting opioids the cancer patient is already taking around the clock. TIRFs are niche products, but the niche can be lucrative because the drugs command such a high price. A single patient can produce six figures of revenue.
Fentanyl is extremely powerful — illicitly manufactured variations, often spiked into heroin or pressed into counterfeit pills, have become the leading killers in the opioid crisis — and regulators have made special efforts to restrict prescription fentanyl products. In 2008, for instance, the F.D.A. rebuffed Cephalon’s application to expand the approved use for a TIRF called Fentora; in the company’s clinical trials, the subjects who did not have cancer demonstrated much more addictive behavior and propensity to substance abuse, which are “rarely seen in clinical trials,” F.D.A. officials concluded. An F.D.A. advisory committee reported that, during the trials, some of the Fentora was stolen. The agency later developed a special protocol for all TIRF drugs that required practitioners to undergo online training and certify that they understood the narrow approved use and the risks.
Despite these government efforts, TIRF drugs were being widely prescribed to patients without cancer. Pain doctors, not oncologists, were the dominant players. This was common knowledge in the industry. Although it is illegal for a manufacturer to promote drugs for off-label use, it is perfectly legal for doctors to prescribe any drug off-label, on their own judgment. This allows drug makers like Insys to use a narrow F.D.A. approval as a “crowbar,” as a former employee put it, to reach a much broader group of people.
That points to a major vulnerability in policing the opioid crisis: Doctors have a great deal of power. The F.D.A. regulates drug makers but not practitioners, who enjoy a wide latitude in prescribing that pharmaceutical companies can easily exploit. A respected doctor who advocates eloquently for wider prescribing can quickly become a “key opinion leader”; invited out on the lucrative lecture circuit. And any doctor who exercises a free hand with opioids can attract a flood of pain patients and income. Fellow doctors rarely blow the whistle, and some state medical boards exercise timid oversight, allowing unethical doctors to continue to operate. An assistant district attorney coping with opioids in upstate New York told me that it’s easy to identify a pill-mill doctor, but “it can take five years to get to that guy.” In the meantime, drug manufacturers are still seeing revenue, and that doctor is still seeing patients, one after another, day after day.
Kapoor believed that he had the best product in its class. All the TIRF drugs — for transmucosal immediate-release fentanyl — deliver fentanyl through the mucous membranes lining the mouth or nose, but the specific method differs from product to product. Actiq, the first TIRF drug, is a lozenge on a stick. Cephalon’s follow-up, Fentora — the branded market leader when Subsys arrived — is a tablet meant to be held in the cheek as it dissolves. Subsys is a spray that the patient applies under the tongue. Spraying a fine mist at the permeable mouth floor makes for a rapid onset of action, trials showed.
Once the F.D.A. gave final approval to Subsys in early 2012, the fate of Insys Therapeutics rested on selling it in the field. The industry still relies heavily on the old-fashioned way of making sales; drug manufacturers blanket the country with representatives who call on prescribers face to face, often coming to develop personal relationships with them over time.
The speaker events themselves were often a sham, as top prescribers and reps have admitted in court. Frequently, they consisted of a nice dinner with the sales rep and perhaps the doctor’s support staff and friends, but no other licensed prescriber in attendance to learn about the drug. One doctor did cocaine in the bathroom of a New York City restaurant at his own event, according to a federal indictment. Some prescribers were paid four figures to “speak” to an audience of zero.
One star rep in Florida, later promoted to upper management, told another rep that when she went in search of potential speakers, she didn’t restrict herself to the top names, because, after all, any doctor can write scripts, and “the company does not give a [expletive] where they come from.” (Some dentists and podiatrists prescribed Subsys.) She looked for people, she said, “that are just going through divorce, or doctors opening up a new clinic, doctors who are procedure-heavy. All those guys are money hungry.” If you float the idea of becoming a paid speaker “and there is a light in their eyes that goes off, you know that’s your guy,” she said. (These remarks, recorded by the rep on the other end of the line, emerged in a later investigation.)
As a result of Insys’s approach to targeting doctors, its potent opioid was prescribed to patients it was never approved to treat — not occasionally, but tens of thousands of times. It is impossible to determine how many Subsys patients, under Kapoor, actually suffered from breakthrough cancer pain, but most estimates in court filings have put the number at roughly 20 percent. According to Iqvia data through September 2016, only 4 percent of all Subsys prescriptions were written by oncologists.
Insys became the year’s best-performing initial public offering, on a gain of over 400 percent. That December, the company disclosed that it had received a subpoena from the Office of the Inspector General at Health and Human Services, an ominous sign. But a CNBC interviewer made no mention of it when he interviewed Babich a few weeks later. Instead he said, “Tell us what it is about Insys that has investors so excited.”
In 2014, the doctors each averaged one prescription for a controlled substance roughly every four minutes, figuring on a 40-hour week. A typical pill mill makes its money from patients paying in cash for their appointments, but Ruan and Couch had a different model: A majority of their scripts were filled at a pharmacy adjacent to their clinic called C&R — for Couch and Ruan — where they took home most of the profits. The pharmacy sold more than $570,000 of Subsys in a single month, according to Perhacs’s criminal plea. Together the two men amassed a collection of 23 luxury cars.
Over dinner, according to the Boston indictment, Kapoor and Babich struck a remarkable agreement with the pharmacists and the doctors, who were operating a clinic rife with opioid addiction among the staff: Insys would ship Subsys directly to C&R Pharmacy. An arrangement like this is “highly unusual” and a “red flag,” according to testimony from a D.E.A. investigator in a related trial. As part of the terms of the deal, the pharmacy would make more money on selling the drug, with no distributor in the loop. And there would be another anticipated benefit for all involved: Everyone could sell more Subsys without triggering an alert to the D.E.A.
The local medical community felt the impact of the raid. Because refills are generally not allowed on controlled substances, patients typically visited the clinic every month. For days, dozens of them lined up outside in the morning, fruitlessly trying to get prescriptions from the remaining staff or at least retrieve their medical records to take elsewhere. But other providers were either booked up or would not take these patients. “Nobody was willing to give the amount of drugs they were on,” a nurse in the city said. Melissa Costello, who heads the emergency room at Mobile Infirmary, said her staff saw a surge of patients from the clinic in the ensuing weeks, at least a hundred, who were going through agonizing withdrawal.
Two months after the raid in Mobile, Insys’ stock reached an all-time high.
Insys itself is still producing Subsys, though sales have fallen considerably. (Overall demand for TIRFs has declined industrywide.) The company is now marketing what it calls the “first and only F.D.A.-approved liquid dronabinol,” a synthetic cannabinoid, and is developing several other new drugs. Some analysts like the look of the company’s pipeline of new drugs and rate the stock a “buy.” In a statement, the company said its new management team consists of “responsible and ethical business leaders” committed to effective compliance. Most of its more than 300 employees are new to the company since 2015, and its sales force is focused on physicians “whose prescribing patterns support our products’ approved indications,” the company said. Insys has ended its speaker program for Subsys.