Kickback Plea Deal Bearing Fruit in Insys Investigation


The investigation into an alleged kickback scheme at pharmaceutical company Insys Therapeutics appears to have been greatly aided by a nurse who pleaded guilty in 2015 to accepting kickbacks from the company.

Heather Alfonso, an advanced practice registered nurse, pleaded guilty in a federal court in Connecticut to accepting kickbacks from Insys to promote its cancer drug Subsys in a sham speakers program, and collecting roughly $83,000 through the scheme. In return, she greatly increased her weekly prescriptions of Subsys.

Alfonso was supposed to be sentenced for her admitted conduct in September 2015, but her sentencing hearing was repeatedly pushed back. Prosecutors have stated in joint sentencing delay requests that Alfonso was cooperating in “numerous ongoing criminal investigations,” including assisting prosecutors in the U.S. Attorney’s Office in Massachusetts.

Seven former Insys executives have been indicted in the past several months for running the alleged kickback scheme with providers, the latest on Feb. 8 when former sales manager Jeffrey Pearlman was indicted on one count of conspiracy to violate the anti-kickback law.

The other six recent indictments came from the U.S. Attorney’s Office in Massachusetts, which issued the indictments in December 2016 against former CEO Michael Babich and five other sales executives. Those six have since pleaded not guilty.

Prosecutors described a scheme in which physicians and other practitioners were paid about $1,000 per appearance to speak in a sham educational speakers program touting Subsys. Prosecutors alleged that the speakers usually didn’t make any real educational pitches at the speaker programs, and the payments were just intended as an incentive for the speakers to write more and more Subsys prescriptions.

Court documents related to Pearlman’s indictment reference a “Practitioner 1” who received $83,500 in kickbacks to promote Subsys, and appears to be Alfonso, though a definitive identification is not given.

An FBI special agent affidavit referencing a “cooperating witness 1” consistent with Practitioner 1’s actions is also among Pearlman’s court documents. That affidavit says that cooperating witness 1 is assisting with Pearlman’s prosecution to obtain leniency at sentencing.

Alfonso’s sentencing isn’t slated to happen now until at least July 2017, when prosecutors in her case will submit a joint status report to the court. How much of a break Alfonso ultimately gets because of her cooperation remains to be seen, but the government’s multipronged prosecution appears to have benefited significantly thereby.

Read more about the investigations in my story here.

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