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The U.S. Attorney’s Office for the Southern District of New York announced that Jonathan Roper, a former District Manager at Insys Therapeutics (INSY), and Fernando Serrano, a former sales representative at Insys, were charged with violating the Anti-Kickback Statute.
The charges were in connection with their participation in a “scheme to pay doctors thousands of dollars to participate in sham educational programs in order to induce the doctors to prescribe millions of dollars’ worth”
LinkedIn Provides the Missing Link
Although Insys Therapeutics was not named in the case, Serrano identifies himself as a former employee of Insys Therapeutics.
Additionally, the U.S. Attorney’s Office press release states that “Pharma Company-1’s fentanyl spray was approved by the FDA in or about January 2012.”
A Concerning Track Record
In June 2015, Heather Alfonso pled guilty in United States District Court in Hartford to having received $83,000 in kickbacks from Insys Therapeutics (INSY) during January 2013 through March 2015. Alfonso said the money influenced her prescribing a particular drug, according to the United States Attorney’s Office in Hartford, Connecticut.
Although Insys and the drug were not named in the indictment, in court a prosecutor revealed that the case involved Subsys and Insys Therapeutics.
Expect Weakness Ahead
During the last two years, several physicians who received speaking fees from Insys were disciplined or arrested for improperly prescribing Subsys. Last year, Dr. Gavin Awerbuch was arrested after federal prosecutors said he defrauded Medicare of $7 million and improperly prescribed Subsys to patients. Dr. Awerbuch was paid speaker’s fees by Insys, Another Insys speaker, Dr. Jerrold Rosenberg, was reprimanded last September for inappropriately prescribing Subsys and other painkillers.
Insys Therapeutics’ fentanyl spray is the only FDA-approved product that it currently has on the market. We expect significant weakness in shares of INSY and view the company as a short target.
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