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Former Insys Officials Charged in Scheme to Push Its Painkiller

Federal prosecutors brought racketeering charges on Thursday against several former executives of Insys Therapeutics, a small Arizona drug company, saying they were part of a scheme that involved aggressive sales of the powerful and highly addictive pain drug fentanyl.

Criminal charges are unusual in cases involving pharmaceutical companies, and prosecutors said they intended to put companies on notice.

“Patient safety is paramount, and prescriptions for these highly addictive drugs, especially fentanyl, which is among the most potent and addictive opioids, should be prescribed without the influence of corporate money,” Carmen M. Ortiz, the United States attorney in Massachusetts, said in a statement. “I hope that today’s charges send a clear message that we will continue to attack the opioid epidemic from all angles, whether it is corporate greed or street-level dealing.”

According to the indictment, the six former employees, including the former chief executive, Michael L. Babich, and regional sales directors, offered bribes and kickbacks to pain doctors in various states in exchange for getting them to prescribe more of the company’s product, Subsys, a spray form of fentanyl. Subsys is supposed to be used only by cancer patients who are already on round-the-clock pain drugs.

A lawyer for Insys declined to comment beyond a brief statement that said the company was cooperating with authorities “in all relevant investigations.” Lawyers for Mr. Babich and Alec Burlakoff, who was the company’s vice president of sales, said their clients would plead not guilty. Anthony Pacheco, a lawyer for Joseph A. Rowan, a former regional sales director, described the indictment as a list of “the government’s unproven factual assertions and legal theories.” Lawyers for the other defendants either did not return calls or could not be reached.

Prosecutors said executives at Insys began to aggressively market Subsys soon after it arrived on the market in 2012, and they were frustrated because it was not performing well against several similar fentanyl products that were already on the market. So over the next few years, they set out to woo pain doctors who had a track record for prescribing large quantities of fentanyl, enticing them with speakers’ fees, lavish dinners and in some cases going so far as to hire their relatives.

In one exchange, Mr. Burlakoff texted a sales representative and told her not to worry about whether one of the doctors had good communications skills. “They do not need to be good speakers, they need to write a lot of” prescriptions for Subsys, he told her, according to the indictment.

In return, the indictment said, the doctors wrote large numbers of prescriptions for people who did not have cancer. An analysis in 2014 showed that only 1 percent of prescriptions for the drug were written by oncologists.

Top prescribers were given special treatment, with Insys assigning its own employees to help with office work. In the case of one high-prescribing doctor in Alabama, the indictment said, the company dedicated a sales representative to attend to all of his needs. After the doctor became a paid speaker for Insys, he went from writing about two prescriptions a week to about 11 prescriptions a week, prosecutors said.

Prosecutors said the company set up a “reimbursement unit” that was used to mislead and defraud insurers who were reluctant to approve the drug when it was used for people who did not have cancer. Employees in the department were encouraged to pretend they were calling from a doctor’s office when they called insurers, the indictment said, and Insys also set up its phone system to block the origin of the calls.

In June, two Insys sales employees in New York were arrested on charges of providing kickbacks, and in 2015 a nurse in Connecticut pleaded guilty to accepting $83,000 in kickbacks from Insys.

Subsys is Insys’s only drug and it brought in about $184 million in the first three quarters of this year, down from $238 million over the same period last year. The company announced in September that its founder and current chief executive, Dr. John N. Kapoor, would soon step down. Mr. Babich served as C.E.O. from March 2011 until November 2015.

Pharmaceutical companies have paid billions of dollars in recent years to settle claims with state and federal prosecutors that they sold drugs for uses that were not approved by the Food and Drug Administration. But bringing criminal charges is rare, despite calls from consumer groups to hold top executives more accountable.

“It’s just like bank fraud and mortgage fraud — no one in the big companies ever seems to go to jail,” said Patrick Burns, the acting executive director of Taxpayers Against Fraud, an advocate for corporate whistle-blowers. “If this is the start of a real change in how we deal with corporate crooks, it’s a very big deal.”

A version of this article appears in print on  , Section B, Page 5 of the New York edition with the headline: Ex-Insys Executives Are Charged in a Scheme to Push Its Addictive Painkiller. Order Reprints | Today’s Paper | Subscribe

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