Philadelphia court rules in Aetna's lawsuit alleging conspiracy over opioid reimbursement

By Gabriel Neves | Sep 17, 2018

PHILADELPHIA - A Philadelphia judge has dismissed claims made by insurer Aetna alleging a conspiracy involving Insys Therapeutic Inc., maker of a opioid medication.

Judge Cynthia M. Rufe issued a 24-page ruling on Aug. 23, in the U.S. District Court for the Eastern District of Pennsylvania, in a lawsuit filed by Aetna Inc. and Aetna Health Management against Insys Therapeutics Inc. and former sales executives Joseph Rowan, Sunrise Lee and Dr. Steve Fanto.

Insys lost its motion to strike but was granted a motion to dismiss some of the counts of the suit. Claims against the three individuals were dismissed.

Aetna sued the company, the doctor, and the executives, as well as other physicians and company representatives, over an alleged fraudulent scheme to induce the insurance provider into providing reimbursement for off-label prescriptions of Subsys, an opioid medication produced by Insys.


Judge Cynthia Rufe  

It also claimed that Insys and the other defendants committed negligence, fraud, conspiracy and unjust enrichment.

Insys, based in Arizona, manufactures Subsys, a formulation "of the highly potent opioid, fentanyl, that is administered to patients sublingually (under the tongue) as a spray," according to court documents.

As stated in the ruling, Insys "moves to dismiss Aetna’s common law claims on federal preemption and state law grounds and moves to strike certain allegations from the Complaint."

Subsys, per the ruling, is "administered to patients sublingually (under the tongue) as a spray," and has only been approved by the FDA "for a single narrow indication: breakthrough cancer pain in patients who have failed one or more other opioid therapies." 

The drug is being classified as "a transmucosal immediate-release fentanyl (“TIRF”) product, and has been subject to special restrictions due to its high potential for addiction and abuse," according to court documents.

The medication, according to court documents, "was not listed among the drugs approved for reimbursement in Aetna’s formularies." 

This required Aetna's customers to "obtain prior authorization from its Pharmacy Management Precertification Unit, which applied the following criteria, with limited exceptions, for precertification: (1) documented diagnosis of cancer and concomitant use of a long acting opioid therapy; and (2) documented contraindication or intolerance or allergy or failure of an adequate trial of one week of a preferred generic fentanyl transmucosal lozenge."

The ruling also mentioned that sales of Subsys soared, due to "a two-pronged scheme in which Insys encouraged physicians to over-prescribe Subsys for non-FDA approved (or “off-label”) uses and defrauded insurers into providing coverage for the off-label prescriptions."

While sales of Subsys in 2012 were only $14.3 million, sales increased more than 700% in 2013 and exceeded more than $300 million by 2014, according to court documents. Aetna alleges that the rapid increase in sales was due to Insys allegedly encouraging physicians to over-prescribe Subsys for non-FDA approved uses and "defrauded insurers into providing coverage for the off-label prescriptions," according to court documents.

Aetna also alleged that "Insys targeted promotional efforts toward physicians who did not treat cancer patients but frequently prescribed TIRFs, and recruited physicians willing to write large numbers of Subsys prescriptions into Insys’s speaker program, under which speakers received substantial payments as honoraria," the ruling said.

In order to increase the payment rate for prescriptions, as of the decision, Insys "established a pre-authorization department (PAD) based in Chandler, Arizona, that communicated directly with insurers, including Aetna," who stated that information obtained in opt-in forms was used to "impersonate personnel working at physicians’ offices and disguised the area code of the PAD facility during phone calls to avoid detection."

Federal and state investigations between 2015 and 2017 found that many physicians who had prescribed the opioid to patients "admitted that they had prescribed the drug inappropriately and that they had received payments from Insys as part of its speaker program." 

Many of those patients, as stated by Aetna in the ruling, "did not have a cancer diagnosis."

In her ruling, Judge Ruffe rebutted Insys claims of preemption caused by the Federal Drug and Cosmetics Act (FDCA), the cause for the personal jurisdiction issue.

"Because Plaintiffs’ common law claims are based on breaches of duties created under state law, the absence of a private right of action under the FDCA has no bearing on these claims," Ruffe said.

U.S. District Court for the Eastern District of Pennsylvania Case number 17-4812

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