Roddy Boyd Blog | Insys Therapeutics And The New “Killing It” | Talkmarkets
Investigative Reporter

Roddy Boyd is an investigative reporter who has worked for Fortune Magazine, the New York Post, The New York Sun and Institutional Investor News. The Huffington Post named him one of the 25 most feared financial reporters in America. He also founded more

Insys Therapeutics And The New “Killing It”

Date: Monday, April 27, 2015 2:07 PM EDT

On the evening of July 1, 2014 Carolyn “Suzy” Markland, a 58-year old Jacksonville, Florida resident suffering from a degenerative disc disease, took her prescribed medicine—a 400 microgram dose of a Fentanyl spray called Subsys— and went straight to bed.

Despite regular pain, Subsys was not an everyday drug for Markland.  She had had the prescription filled for several months but almost never took the stuff; her longtime family doctor and pharmacist had expressed plenty of no holds barred skepticism to her about it. On the three occasions she took Subsys, her family noticed that its sedative and respiratory effects were noticeably sharper than those of another strong painkiller she took, Exalgo.

The next day, July 2, Markland went to Dr. Orlando Florete, her pain management physician for the previous five years, for a scheduled injection in her lower spine. As part of her pre-procedure anesthesia mix, she received another Fentanyl dose. Unlike previous procedures however, she wasn’t up and moving around 20-30 minutes afterwards; this time it would take about hour to where her oxygen levels would allow her to be safely released.

Markland was tired for the balance of the day, and headed in to bed early, skipping her usual cup of pre-bed decaf.

She would never wake up.

Pronounced dead at 7:01 a.m. the next morning, July 3, the Jacksonville medical examiners report listed the cause of Markland’s death as “drug toxicity,” noting the presence of both Fentanyl and Exalgo. Her death would be classified “accidental.” The report noted her family doctor refused to sign the death certificate; Dr. Florete did.

Bob Markland, Carolyn’s husband of 19 years, declined to comment apart from providing a timeline of her Subsys use prior to her death.

The medical examiner’s report of the lethal combination of the stream of Fentanyl and other drugs in Carolyn Markland’s blood is both puzzling and sad, seemingly emblematic of a strain in modern American medicine where solutions for pain can be as scarce as the medication of the pain is abundant.

In another sense, Dr. Orlando Florete also represents a parallel strain of American medicine: the physician as compensated endorser. According to the Center for Medicare & Medicaid Services’ Open Payments database, which covers just the last five months of 2013 (2014’s figures are slated for release in June), Florete was paid $18,874.03 by the makers of Subsys, a small but rapidly growing pharmaceutical company called Insys Therapeutics Inc. (INSY), to travel and speak to fellow doctors.

Additionally, Dr. Florete, according to Freedom of Information Act documents obtained by SIRF, was paid $133,770.36 between January 1, 2013 and May 31, 2103 by TRICARE, the U.S. military’s primary health insurance plan, for writing 16 Subsys prescriptions.

Pharmaceutical companies compensating physicians for discussing their product--or even attending carefully-scripted seminars--is a longstanding, and legal, practice. To be certain, it has long been a concern of many within the medical community and starting in 2013, regulations were put in place to ensure disclosure of all physician payments. (Pro Publica has a wealth of information on the issue.)

A phone message seeking comment from Dr. Florete about his relation with Insys and his Subsys prescription writing was not returned as of the time of publication.

Like Dr. Florete's speaking engagements, another unremarked upon issue was the nature of Carolyn Markland's Subsys prescription: a drug indicated solely for breakthrough cancer pain was prescribed for a bad back. As with accepting pharmaceutical company payments, the law affords doctors great latitude in determining whether drugs can be prescribed for reasons other than what they are designed for. On the other hand, doctors writing prescriptions based on off-label marketing have been at the center of nearly two dozen False Claims Act legal settlements in the past 20 years, resulting in over $13 billion worth of pharmaceutical company fines and settlement payments.

In the case of Subsys, its official label--the folded paper insert with the impossibly small typeface that comes with the package--notes that it's contra-indicated for headache pain and for those who are not tolerant of the opioid class of drugs. According to the Center for Disease Control, 175,000 people died from some form of prescription opioid abuse between 1999 and 2010, compared to a combined 120,000 from heroin and cocaine overdoses.

Like Dr. Florete, Insys Therapeutics is doing pretty darn well. The company has had a remarkable level of financial success and its soaring stock price has made it a darling on Wall Street.

Screen Shot 2015-04-23 at 7.55.46 AM

But that level of growth ought to warrant a raised eyebrow; going to over $222 million sales from about $15.5 million in just two years without inventing something like a better search engine is no mean feat. Fentanyl, after all, has been around for many years and while Subsys is the only spray version available, several of Insys’s competitors are well-established and better capitalized, with sales forces that reach all 50 states.

While details on the particulars of the breakthrough pain medication market are hard to find, or at least details that aren't self-serving management estimates, veteran sales staff from Insys and other pharmaceutical companies put its growth prospects at roughly 10% a year. If that's true, and the company is selling to oncologists then growth possibilities for Insys should be a function of that plus whatever they can take away from its larger competitors. Many companies would be happy for those odds.

But Insys grew north of 100%, implying that whatever organic growth they are getting is being aided by a whole lot of doctors who have grown profoundly fond of an expensive drug that brings an acre of governmental red-tape with it and that one of the largest pharmacy benefit managers will no longer touch.

The question then becomes "How?" and "Why?"

A SIRF investigation into Insys reveals that this growth has come at a remarkable price: Food and Drug Administration data shows that Subsys is proving lethal to a growing number of patients, many of whom, like Carolyn Markland, are taking it for so-called off-label indications, such as headaches and back pain.

Finally, in reporting the story, SIRF repeatedly encountered former Insys employees who had received subpoenas requiring their appearance in front of a Department of Justice grand jury that has been empaneled in Boston. Still others had been interviewed by investigators conducting an investigation for the Department of Health and Human Services' Office of the Inspector General.

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Comments

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Dan Jackson 5 years ago Member's comment

Wow, very well done! Quite the expose.

Paul McGee 5 years ago Member's comment

What a coincidence that this article comes out before ER. I had just loaded up on this stock. :-)

Susan Miller 5 years ago Member's comment

Unbelievable! This report is utterly shocking to me - the executives of this company should be in prison. Well done Mr. Boyd.