New Jersey’s False Claims Act

On October 5, 2017, the State of New Jersey sued Insys Therapeutics, Inc. (Insys), alleging that the company improperly marketed and promoted the opioid-fentanyl painkiller drug, Subsys. The civil complaint (Complaint) follows a series of federal indictments (and in some cases guilty pleas), of several Insys employees and executives, as well as lawsuits and ongoing investigations being conducted by several states.

Like many other suits against drug manufacturers for improper marketing and promotion, the Complaint alleges violations of state consumer protection law (here, the New Jersey Consumer Fraud Act). However, representative of a growing trend among the states, especially in the context of the country’s opioid epidemic, the Complaint also alleges a violation of state False Claims Acts (here, New Jersey’s False Claims Act). Manufacturers, physicians, pharmacies and others should closely review their compliance practices to anticipate such claims in light of the increased assertion of False Claims Act violations at the state level.

Echoing the allegations in other complaints against the company, the New Jersey complaint alleges that Insys improperly marketed Subsys in several ways. The Complaint alleges that, although the US Food and Drug Administration (FDA) approved Subsys only for the “single use of managing breakthrough cancer pain in patients who are tolerant to around-the-clock opioid therapy,” Insys directed its sales force to “peddle” Subsys to a broader patient population. For example, the Complaint alleges that Insys provided its sales force with “target lists ranking by deciles healthcare providers, including dentists and podiatrists, who could write prescriptions for controlled dangerous substances.” The Complaint alleges that: oncologists appeared at the bottom of these target lists, that a small percentage of the sales force was “oncology-specific,” and that the small group was disbanded shortly after Insys created it.

The Complaint also alleges that Insys “pushed” prescribers to prescribe Subsys on an inappropriate starting dosage above the FDA-mandated starting dose. For example, the Complaint alleges that: Insys’ tactics included emails from Insys executives requesting that members of the sales force explain lower-dose prescriptions, implementation of a “Switch” program designed to convert patients on high levels of competing products to the same high dosage of Subsys, a “Super Voucher” program to provide free Subsys prescriptions to prescribers, and “bribes” to prescribers alleged to be in the form of “speaker fees.”

In addition to three counts of violations of New Jersey’s Consumer Fraud Act, the Complaint alleges that Insys’ conduct violated the False Claims Act. The Complaint alleges that Insys caused the submission of false claims for reimbursement of Subsys to several New Jersey state-run programs, including New Jersey’s State Health Benefits Program, School Employees’ Health Benefits Program and State Workers’ Compensation Program. The Complaint alleges that these submissions included allegedly false expressed and/or implied certification of compliance with federal and State law and medical necessity.

The case is Porrino v. Insys Therapeutics, Inc., Superior Court of New Jersey, Chancery Division, Middlesex Vicinage.