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Ex-CEO of drug company to plead guilty in major opioid case

Image: Fentanyl-based Subsys
A box of the Fentanyl-based drug Subsys in an undated photograph. -
U.S. Attorney's Office for the Southern District of Alabama via Reuters
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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.

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 the 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.

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.