NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION DEPARTMENT OF JUSTICE STATE OF OREGON IN THE MATTER OF NOTICE OF UNLAWFUL TRADE INSYS THERAPEUTICS, INC, PRACTICES AND PROPOSED RESOLUTION Respondent. TO: Insys Therapeutics, Inc 444 South Ellis Street Chandler, AZ 85224 c/o David Angeli Angeli Unger Law Group LLC 121 SW Morrison Street, Suite 400 Portland, OR 97204 This notice is to inform you the Oregon Attorney General is authorized to ?le a lawsuit against you 10 days after you receive this notice. The Attorney General is required by statute to give you this notice. See Oregon Revised Statute 646.632. To avoid the ?ling of a lawsuit against you, you may deliver an Assurance of Voluntary Compliance to the Financial Fraud Section of the Oregon Department of Justice within 10 days after you receive this notice. An AVC must be in writing and state what actions you intend to take to resolve the violations described below. The AVC is not an admission of violation of law and is submitted to a Circuit Court for the State of Oregon for approval and ?ling. The Attorney General must approve and accept an AVC before an AVC is submitted to the Circuit Court. Once ?led with the court, any willful violation of the terms of an AVC is a contempt of court which may result in punitive or remedial sanctions including con?nement and civil penalties of up to $25,000 per violation. Page 1 of 20 DEPARTMENT OF JUSTICE 1515 sw 5th Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 10NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION This notice becomes a public record after 10 days have passed following your receipt of this notice. The Attorney General sent you this notice because there are concerns you violated the Oregon Unlawful Trade Practices Act, ORS 646.605 through ORS 646.656, including but not limited to the following alleged conductImplicitly misrepresenting to patients that Subsys? should be used to treat migraine, neck pain, back pain, and other off?label uses for which Subsys is neither safe nor effective. This implicit misrepresentation occurred when you paid patients? insurance co- payments even when you knew the prescription was off?label or contraindicated; when you arranged for free Subsys to be provided to patients even when you knew the free product was for an off?label or contraindicated use; and when you advocated to obtain insurance payments to patients for Subsys when you knew Subsys was to be used for an off?label or contraindicated use. Implicitly misrepresenting to doctors that Subsys could be used to treat migraine, neck pain, back pain, and other off?label uses for which Subsys is neither safe nor effective. Implicitly misrepresenting that the doctor whom you paid to teach Oregon physicians about Subsys was qualified to prescribe and teach about Subsys when in fact; he was not quali?ed. Misrepresenting that a paper written by a well?known doctor supported the definition of break through cancer pain used by you to promote Subsys when in fact, the paper did not support the de?nition. Misrepresenting that Subsys should be used to treat mild breakthrough cancer pain when in fact, the potential harm of using Subsys to treat mild pain far outweighs any possible bene?t. Employing an unconscionable tactic by making payments to doctors that you intended to be a kickback to incentivize the doctor to prescribe Subsys. Page 2 of 20 DEPARTMENT OF JUSTICE 1515 SW Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Wu? was W: as: .7 .7 raw??w? 7 7) Employing an unconscionable tactic by targeting Subsys promotion at doctors whom you knew, or should have known, misprescribed Schedule II opioid drugs such as Subsys. 8) Employing an unconscionable tactic by targeting doctors for Subsys promotion when you knew, or should have known, that the doctor only prescribed Subsys for off?label uses for which Subsys is neither safe nor effective. 9) Employing an unconscionable tactic by arranging for free Subsys to be provided to patients, and paying patients insurance co?payrnents for off?label uses of Subsys that you knew, or should have known, were neither safe nor effective. 10) Employing an unconscionable tactic by pressuring sales representative to solicit doctors to shorten the label mandated titration schedule designed to protect patients. Background Starting in anuary, 2012, Insys Therapeutics, Inc. (Insys) promoted and sold in Oregon the Schedule II opioid drug Subsys. Schedule II opioid drugs have a high potential for abuse and addiction. They can also have serious side effects which include respiratory depression and death. Subsys consists of the powerful and highly addictive narcotic fentanyl administered through a sub-lingual (under the tongue) spray. Because it is absorbed rapidly into the bloodstream through the sub-lingual mucosa, Subsys has a rapid onset. Subsys is one of a class of drugs described as Transmucosal Immediate?Release Fentanyl To ensure that prescription drugs sold in the United States are safe and effective, the Food Drug and Cosmetic Act requires drug manufacturers to submit a new drug application for all prescription drugs sold in the United States. The NDA must include clinical trials sufficient to prove to the US. Food and Drug Administration?s satisfaction that the drug is safe and effective for each and every indication (use) for which the drug is sold. If a manufacturer wants to market a drug for an indication not initially approved by FDA,.the company must submit a supplemental new drug application that Page 3 of 20 DEPARTMENT OF JUSTICE 1515 SW 5m Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION demonstrates to satisfaction that the drug is safe and effective for the new indication. The Food Drug and Cosmetic Act makes it unlawful for companies to promote drugs for indications FDA has not approved. Since FDA regulates drug manufacturers and the promotion of drugs, but not the practice of medicine, doctors are free to prescribe drugs for indications for which FDA has not determined that the drug is safe and effective. Such prescribing is described as ?off-label,? meaning outside the FDA-approved label. Eased on the Subsys NDA submitted by Insys, FDA determined that Subsys may only be lawfully promoted ?for management of breakthrough pain in cancer patients 18 years of age or older who are already receiving and who are tolerant to opioid therapy for their underlying ?1 Any other use would be off?label. FDA also determined that to ensure persistent cancer pain. appropriate usage, Subsys is only intended to be prescribed by ?pain specialists who are knowledgeable of and skilled in the use of Schedule II opioids to treat cancer pain.? The approved, label also expressly provides that Subsys is ?contraindicated? (should never be used) to treat migraine headaches. Although not expressly contraindicated in the label, Subsys should also not be prescribed to treat mo st musculoskeletal pain, such as fibromyalgia, neck pain, and back pain, for which Subsys has not been shown to be safe or effective. In fact, prescribing of opioids for back and neck pain is often harmful and may ultimately lead to increased pain, dysfunction, and disability. To help protect against Subsys? potentially fatal side effects, and to reduce the risk of misuse and abuse, FDA determined that doctors should use the lowest possible dose of Subsys that adequately treats a patient?s This is achieved through ?titration? where the doctor initially prescribes 100 micrograms (unless the patient is already using another TIRF, in which case the starting dose can be higher) and slowly increases to higher dosages at a specified schedule while waiting at each dose level to determine whether the patient?s pain is adequately managed. While the highest dose of Subsys is 1600 micrograms, according to studies 1 Subsys label. Page 4 of 20 DEPARTMENT OF JUSTICE 1515 sw 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION included in the FDA approved label, breakthrough cancer pain is well managed in approximately 25% of patients at 400 micrograms or less. Although patients bene?t from using the lowest possible dose, Insys earns more money when a higher dose is prescribed, as do Insys sales representatives whose Compensation is based on commission. The first TIRF drug approved by FDA was Actiq?, which has the same FDA approved indications as Subsys. In 2008, Cephalon pleaded guilty to criminal and civil charges that it promoted Actiq for off?label uses and targeted physician specialties such as Physical Medicine and Rehabilitation doctors or ??Physiatrists?) who do not usually treat cancer patients but commonly treat neck and back pain. Among other things, Cephalon admitted to promoting Actiq off?label to treat migraine headaches. As a result of the federal enforcement action against Cephalon, even before Subsys was approved for sale, Insys knew that there was a problem with off?label use of TIRF drugs and that prescribers of Actiq, and doctors in particular, had been targeted with off?label messaging regarding TIRF drugs. To reduce the risk of abuse, misuse, and diversion, FDA instituted a Risk Evaluation and Management Strategy for Subsys and other fentanyl products ?to ensure that the bene?t of the drugs outweigh the risk of the drug.?2 The purpose of this REMS was to educate ?prescribers, pharmacists, and patients on the potential for misuse, abuse, addiction, and overdose? for this class of drugs.3 Sadly, the REMS for fentanyl drugs is particularly necessary in Oregon which in 2012 led the nation in the estimated rate of nonmedical use of prescription opioids versus the national mean of To address the opioid epidemic in Oregon, the Prescription Drug Taskforce, appointed by previous Governor Kitzhaber to study the problem, speci?cally recommended that among other 2 U.S.C. 355?1. 3 Press Release, FDA Approves Shared system REMS for TIRF Products (December 29, 2011), available at 85345 .htm. 4 Substance Abuse and Mental Health Services Administration, he NSD UH Report: State Estimates ofNonmea?z'cal Use ofPrescripz?ion Pain Relievers (2012). Page 5 of 20 DEPARTMENT OF JUSTICE 1515 sw 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 4NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION interventions, it is necessary to ?educate prescribers and the public on the risks of opioid use and to reduce the amount of opioids in circulation.5 Unfortunately, rather than educate prescribers and the public about appropriate use of Subsys in order to reduce the risk of abuse, misuse and diversion, Insys did the very opposite. A's alleged below, rather that promoting appropriate use of Subsys, Insys used unconscionable, false, and deceptive sales tactics which had the potential of increasing the misuse of Subsys in Oregon. When Insys began promoting Subsys in 2012, it consciously targeted prescribers of Actiq already predisposed to prescribe TIRF drugs off-label, with unconscionable and deceptive promotion of Subsys. Within two years of Subsys' release, it was reported that approximately 80% of Subsys prescriptions were for off?label uses. Insys Promoted Subsys Off? Label for on-Cancer Pain such as Back Pain and Neck Pain, Uses for which Subsys is Neither Safe Nor Effective As discussed above, Subsys was never approved by FDA to treat back pain, neck pain, myalgia, migraine or any other non?cancer pain. Opioids in general are highly problematic for non-cancer chronic pain6 and are often counter-productive for back pain.7 TIRFS in particular are unsuited for treating these chronic conditions. Nonetheless, Insys promoted Subsys off?label to treat a back and neck pain and other off-label pain conditions. Subsys did so by targeting physicians who primarily treated the off-label pain but did not treat breakthrough cancer pain. Insys? goal was to get the doctor to prescribe Subsys even though the nature of the doctor?s practice was to only treat non?cancer pain and use of Subsys could only be off?label. Insys also worked with patients and doctors to get insurance to pay for Subsys for off? label conditions for which it is neither safe nor effective; provided economic incentives to its 5 Dennis McCarty et al., Oregon ?s strategy to control prescription opioid misuse: a case study, Journal of Substance Abuse Treatment (2014), available at 6 Roger Chou et al., The Effectiveness and Risks of Long?Term Opioid Therapy for Chronic Pain: A Systematic Review for a National Institutes of Health Pathways to Prevention Workshop Effectiveness and Risks of Long-Term Opioid Therapy for Chronic Pain, 162 Ann Intern Med 276 (2015). 7 Richard A. Deyo et al., Opioidsfor low backpain, 350 BMJ g6380( 2015). Page 6 of 20 DEPARTMENT OF JUSTICE 1515 SW 51h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION sales reps to promote Subsys off-label for nonecancer pain; implicitly encouraged sales representatives to promote off-label for nonecancer; paid patient coepays when Lusys knew the Subsys prescription was for an offelabel or even a contraindicated use; and gave free samples to patients when knew that the drug was to be used ctr--label, From the start, made the strategic decision to target doctors who were already prescribing Actiq and other and had already been exposed to Cephalon's unlawful off. label promotional campaign which was the subject ofthe federal criminal action, Only a minority omiese physicians are oncologists likely to prescribe Subsys for the onelabel indication ofbreakthrough cancer pain. Rather than focus on oncologists, targeted specialties like that rarely. if ever, treat breakthrough cancer pain but commonly treat neck and back pain A good example of this was aggressive promotional campaign targeting Dr Roy.a physician practicing at-- in Tlgard, Oregon. As below, targeted in. even though knew Dr-does not neat patients with breakthrough cancer pain and could not prescribe Subsys onelabel, On September 19, 2m 3, hired Jonathan' Dn--'s son, as its Oregon Subsys sales representative Jonalhan- had no background in pharmaceutical sales or healdi care. Shortly alter he was hired, Jonathan set up a dinner meeting between his father, Insys -- and Stuart Rosenblurn, an anesthesiologist with a long history of spcaking on behalf ofpharmaceutical companies about drugs, including drugs that were unlawfully promoted Offelabel to treat certain types ofpain.x Rosenblum is a long-time acquaintance of Dr. The dinner took place October 21", 2013 at Riccardo's Ristorante in Lake Oswego; it cost about $100 per person. Rosenblum was paid $1,500 to speak to Dr,- about Subsys at the dinner. Even before the dunner, knew that Dr -did not treat ln 2009 Phannacia Upjohn Company pleaded a felony violation of the Food. Drug and Cosmetic Act for nextra the intent to defraud or mislead Although FDA repaired the Ecxlm NDA for an acute pain indication, Pharmaciz at UpJohn promoted it for this use anyway ultimately laextra was totally Withdrawn from L'na market for any use. Dr Rosenbluin was one of Pharmacla's top laexaa speakers Oregon. Page 7 of 20 nevumam OF JUSTICE sw 5'"sz Suite M0 on 97222 PHONE patients with breakthrough cancer pain, and that the types of patients Dr .treats would not benefit from Subsys. In fact, Insys had been told repeatedly that this was the case, On November 1, 2013 Jonathan-treated to his father: "These people from my company are relentless and it's kind nf pissing me off, I have told them multiple times (starting with the mtervrew) that you probably wcn'l be writing any product due to Lhe type ofpractiee you have, hut my manager just called me an[sic} told me that they were 'concemed' that I haven't gotten you tirf rams enrolled. I'm getting ready to tell them to 05 [expletive deleted}. Now they told me that dr kapcor" contacted you. 1 necd you to help me to figure out what to say to them to calm them down" when John-was asked during a sworn interview how many breakthrough cancer patients were treated by his father at he replied "None." In addition to trying to use family relationships and old acquaintance prescribe Subsys offrlabel, also used flirtation. On October 2013 - texted his son, asking if it "seemed weird that he was getting texts fro:- -proposing "tequila dates." in a sworn interview Jonathan-was asked: What did you say in response to yuur father's question, "Does it seem weird to you"? A Probably something along the lines of, She's a cougar and that's what she's going to do She is a cougar? A Yeah. In the general term otcougarisrnjust to continue with that, why was Beth sending these texts to your father? A Yeah. 1 don't want to get down like a rahhit hole of speculation, but. you know, she .. you know, attractive lady. She thought she could use that to kind or sway doctors to write and so she would send my dad text messages like that. 9 Kapoor is the fuundcr and the Executive Director orthe Board omirectors and has been closely involved Lhe development at Suhsys NOTICE OF UNLAWF TRADE PRACTICES AND PROPOSED RESOLUTION Page 8 uf20 or swsteSuiietlu on 97222 PHONE. (an) em lau NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION also sought to in?uence Dr. -by offering to make him a Subsys promotional speaker even though Dr.? had never prescribed Subsys and did not treat the type of patients that wouldbene?t from Subsys. On November 12th, 2013 Jon- wrote to Dr. ?This company really want to make you a speaker. Apparently Kapoor had good things to say about you. The VP of sales wants to come out and speak with you . . . I apologize for being pushy.? Insys knew that Dr. -did not treat cancer patients and could not prescribe Subsys on?label for the FDA approved indication. Nonetheless, aggressively and persistently targeted Dr.? and other non?oncolo gist physicians in an attempt to increase prescribing of Subsys for off?label uses for which it is neither safe nor effective. Ultimately carnpaign to get Dr-to prescribe Subsys off?label was unsuccessful: Dr. .?wrote no prescriptions for Subsys. On December 19th, 2013, after only three months working as a Subsys sales representative, Jonathon- resigned. While targeting doctors who could only prescribe Subsys expected its sales representatives to implicitly promote Subsys for off?label uses. Although lip service was paid to not breaking the law, the expectation was that sales representatives would do just that. Jaimi Hooker was ?rst and longest serving Oregon Subsys sales representative. In a sworn interview, she testi?ed: This was for a diagnosis of back pain. Was there a discussion in the meeting about doctors writing prescriptions for SUBSYS for back pain? A It would be, it would definitely be talked about. Like what are you seeing what providers write for? De?nitely back pain came up. Were you implicitly encouraged by your superiors to try to get docs to write for back pain? A Yes. In like as on the label as you can kind of way, yes. So the goal was to try to get does to write for back pain but still technically not ask them to directly write for back pain? Page 9 of 20 DEPARTMENT OF JUSTICE 1515 SW 5m Ave Suite 410 . Portland, OR 97222 PHONE: (971) 673?1880 27?! v' A Right. Or just like imply do you have any patients that experience breakthrough cancer pain. a It was marketing for off-label uses by implication, is that correct? A I would say that that?s fair to say. In another portion of the interview, Hooker indicated that managers expected reps to ask for all of a doctor?s business including off?label uses. This is another exchange involving Karen Hill and Richard Simon. If we go to the second page of this document there is an email from December 14, 2012 from Rich to Karen. And again, they are talking about you and an assessment of amie[sic], and they talk about you asking doctors to write to their capabilities. What does it mean to have a doctor write to their capability? A I think it means that they were probably writing for our competitors, our competitor, so maybe it meant to get all of that business and also write more. They probably felt like they had patients, like these providers had patients that could be written that would be provided with SUB SYS. A few more lines down Rich says that "she, ?meaning you, "is at the point where her doctors truly like -- cap HER to have the dif?cult conversations and try to move them. What's the dif?cult conversation? A I think thedif?cult conversation was to ask them to write more. Why would that be difficult? A Because it would be asking them to take business from our competitors who they probably have a relationship with like the other reps. But also it would probably imply writing more off?label. I think that that's kind of what that means. It's like trying to ?nd patients. also pressured sales representative to circumvent the Subsys label, even parts of the label relating to safety and titration. As already discussed, the Subsys label expressly instructs prescribers to start at the lowest possible dose and titrate slowly upward in a way that would allow for the doctor to determine the lowest possible effective dose. However, whenever a doctor followed the label and started low, sent an email to the doctor?s sales representative that was copied to top management which instructed the rep to ?report back to NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 10 of 20 . DEPARTMENT OF JUSTICE 1515 SW 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 i 7 ?r your manager within 24 hours on WHY the low dose was used and HOW the doctor plans to titrate the patient to effective dose.? The clear implication of these communications was to pressure the sales representative to try to get the doctor to prescribe a higher dose even before it had been determined whether the lower dose is effective. Sales representatives also had an economic incentive for doctors to prescribe a high dose and to prescribe Subsys off-label since Insys? compensation plan paid sales {representatives based on the value of the prescriptions written by the sales representatives? doctors and the price of Subsys was based on the size of the dose. The higher the dose, the higher the price and the higher the commission. Moreover, sales reps received their commission even when knew that the prescription was for an off-label or contraindicated use. often knew when a prescription was for an off~label or contraindicated use because provided reimbursement assistance to patients with insurance prior authorization requests. For example, when sports mediCine doctor immy D. Huebert of the Sports and Spine Center in Tualatin prescribed Subsys for a patient with a herniated disc, filled out the prior authorization form on behalf of the doctor and actively assisted in submitting the form. Insys did the same when James Gallant (discussed further below) prescribed Subsys for a diagnosis of ?Back Pain,? and then again when Gallant prescribed Subsys for ?neck pain.? Insys similarly assisted with the prior authorization process for at least ?ve off-label prescriptions written by Stuart Rosenblum which list diagnoses of spinal stenosis, osteoarthrosis, myalgia, myositis, post laminectomy neuralgia neuritis and radiculitis but not for breakthrough cancer pain. Insys also submitted reimbursement forms for at least five other Oregon patients with diagnoses such as chronic pain As discussed further below, even went so far as to provide pre?authorization assistance and reimbursement assistance when Insys knew that the prescription was for a contraindicated use. Moreover, under the Subsys ?Patient Savings Program,? these patients who Insys knew were prescribed Subsys for off?label uses were eligible to receive up to 60 free units oerubsys. also paid the patients? out?of?pocket copay for up to $500 for NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page ll of 20 DEPARTMENT OF JUSTICE 1515 SW 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 each prescription. All told, out of 18 preauthorization forms submitted by Insys on behalf of Oregon patients that are known to D01, 14 were for off?label uses related to chronic, non- cancer pain such as chronic pain joint pain involving multiple sites, and degeneration of lumbar or lumbosacral intervertebral discs. Insys was fully aware that its reimbursement assistance program was unconscionably assisting in the misuse of Subsys. Moreover, by providing reimbursement assistance, Insys implicitly misrepresented to patients, payors, and physicians, that Subsys was appropriate for these off?label uses. Insvs Unconscionablv Targeted Roy Blackburn, a Problem Doctor Who Misprescribed Opiates, With Aggressive Subsys Promotion and Facilitated His Prescribing of Subsvs for Contraindicated Uses. On November 7th, 2013, Dr. Roy Blackburn entered into an Interim Stipulated Order with the Oregon Medical Board to cease prescribing of controlled substances for chronic pain patients pending the completion of the Board?s investigation into his ability to safely and competently practice medicine. On June 3rd, 2014, the Oregon Medical Board issued a Complaint against Dr. Roy Blackburn that describes gross or repeated acts of negligence; prescribing of controlled substances Without a legitimate medical purpose; and prescribing of controlled substances without following accepted procedures for examination of patients. In July 2014, Blackburn agreed to a stipulated order which, among other things, prohibited him from prescribing Schedule II drugs, or from prescribing any drug for chronic pain to, a patient for more than 30 days in a one year period. Blackburn is a physiatrist and not a pain specialist who would be knowledgeable of and skilled in the use of Schedule II opioids to treat cancer pain. Blackburn treats chronic non?cancer pain patients. Nonetheless, he was the target of aggressive Subsys promotion during the time period described in the Board of Medicine Complaint. He was the third most heavily detailed (visited) doctor by Subsys sales representatives in Oregon. Blackburn and his of?ce were visited by Insys sales representatives at least 80 times; on at least 28 of those Visits, the sales representative brought coffee and/or snacks. On October 23, 2012, paid Dr. James Gallant $2,400 to speak to Blackburn and one of his employees at a NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 12 of 20 DEPARTMENT or JUSTICE 1515 SW Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 catered lunch at Blackburn?s of?ce. At this lunch, Gallant promoted Subsys for among other things, treatment of mild breakthrough cancer pain (discussed further below). On November 26, 2012, Insys paid Dr. Stuart Rosenblum $1,600 to give the same promotional talk to Blackburn and two other doctors at Marche, a French restaurant in Eugene. Insys knew, or should have known, that Dr. Blackburn is not a pain specialist knowledgeable and skilled in the use of schedule ll opioids to treat cancer pain. In fact, Insys knew that Blackburn prescribed Subsys for migraine, an expressly contraindicated use, and helped Blackburn obtain third party payment for the contraindicated use. On February 18th, 2013, Insys Prior Authorization Specialist Liz Gurrieri wrote Blackburn?s Subsys sales representative Jaimi Hooker . . .I received a duplicate opt in for Dr Blackburn?s pt [name redacted] for 600 mcg. He is requesting 240 units per month for migraines. I do not think we can get it approved but we can try . . On February 6th, 2013, Gurrieri wrote to Hooker (copied to, among others, Director of Sales Rich Simon and Vice President of Sales Alec Burlakoft) that she had received the request. On March 28th, 2013 Hooker wrote to Blackburn, ?Hi Dr I tried forwarding you an email about [name redacted]. I just wanted to let you know that he is now reapproved for Subsys and our company called the '37 pharmacy and spoke with Aaron to run a dummy script and it went through In addition to being unconscionable, the sum total of this conduct was to misrepresent to the patient and the third party payor that Subsys is appropriate for the treatment of migraines. Insys Unconscionably Targeted James Gallant, A Problem Doctor who Misnrescribed Opiates, With Aggressive Subsys Promotion. Despite Gallant?s Lack of Quali?cations, Insys Hired Gallant to Teach Other Doctors about Subsys. The Payments made to Gallant and other Doctors were intended to be Kickbacks to Increase Prescribing of Subsys. Dr. James Gallant is a medical doctor who has never been board certi?ed by any medical specialty. Except for a four-day commercial continuing education program in Las Vegas, he lacks post graduate training in pain management. In October 2014, based in part on Gallant?s misprescribing of opioids, the Oregon Medical Board suspended Gallant?s license for 90 days, NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 13 of 20 DEPARTMENT or JUSTICE 1515 sw 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 formally reprimanded him, imposed a $10,000 civil penalty, placed him on probation for 10 years, ordered him to complete an assessment and education or remediation plan, a course in medical ethics, and a course in prescribing, and ordered him to refrain from treating chronic pain. I Gallant has a long history of reCeiving letters of concern and formal reprimands from the Board of Medicine, and in1997 he was formally reprimanded and his license was suspended after it Was determined that he had euthanized a patient. Gallant is not a pain specialist knowledgeable of and skilled in the use of Schedule II opioids to treat cancer pain. Nonetheless, Insys hired Gallant as its top Oregon consultant to train doctors about safe usage of Subsys. Gallant was Insys? top Oregon Subsys consultant. He was paid up to $2,400 to give short promotional talks about Subsys. The amount Insys paid Gallant for his talks was 50% more than the amount paid Stuart Rosenblum, the second most frequent Oregon Subsys speaker who is a board certified anesthesiologist. Gallant was also a paid member of a Insys ?Advisory Board and was paid to attend speaker training programs, including 332,5 00 to attend a speaker training program in San Francisco that occurred after he stopped doing Subsys talks. In 2012 and 2013, Gallant?s office was visited by Insys sales representatives over 100 times, more than any other doctor in Oregon. On at least seven occasions, the sales rep brought lunch or breakfast for the office. Gallant was also repeatedly taken out for meals by Insys sales representatives. Some of the talks paid for by Insys were shams that were essentially an excuse to make a payment to Gallant to encourage increased prescribing of Subsys. On one occasion, Gallant was paid $2,400 plus expenses to speak to his own physician assistant over a meal at an expensive restaurant. In sworn testimony, Subsys sales representative Iaimi Hooker testified that this sham talk was expressly approved by Director of Sales Rich Simon, who knew the only attendee at the talk was Gallanti?s assistant. Such sham talks were not unique to Gallant. For example, Stuart Rosenblum was paid $1,600 to speak at what was essentially a social event and an opportunity for Rosenblum to market his practice to other doctors. As Rosenblum wrote in an invitation to the event (that was NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 14 of 20 DEPARTMENT OF JUSTICE 1515 sw 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 copied to Jaimi Hooker): ?you are invited to a social event this Friday at 1530 SE 7th near Hawthorne) Vie de Boehme. Phone 503?360-1233 at 8PM. We are having food and drinks supplied by Jamie [sic] of Wives and girlfriends are invited Scott?s band will be playing. They start about 9pm. I hope to see you there.? In a subsequent email that Rosenblum wrote to his clinic staff: have rescheduled our dinner event. . .Our pain clinic stay?? and our wives are invited. Please feel free to invite any referring physicians and we can use this for marketing as well. Dinner is sponsored by and I will give a brief informal presentation. Otherwise the evening will be for socializing and networking. RSVP to Jamie [sic]. . was well aware that payments made to Gallant and Rosenblurn were not for bona ?de educational events but rather were an attempt to buy good will and an obligation to prescribe A Subsys. fully intended that its payments to Gallant and Rosenblum would cause the doctors to write more Subsys prescriptions. For example, after Subsys sales executive Karen Hill did a site visit to Oregon and accompanied sales representative Jaimi Hooker on visits to Gallant and Rosenblurn, Hill wrote to Vice President of Sales Alex Burlakoff and CEO Michael Babich managed to meet her speakers and challenged each of them (we are paying these guys [Gallant and Rosenblum] and not seeing a return on our investment.? In another. email from District Sales Manager Skelton (who had responsibility for Oregon) to Director of Sales Rich Simon, which was subsequently forwarded to a number of other sales representatives (including Oregon Sales Representative Iaimi Hooker), Skelton wrote that she had confronted one of her speakers for failing to write a suf?cient number of Subsys prescriptions. She further wrote that is response was ?thank you for telling me this. It is a privilege to be a speaker and an advocate for you and if I ?m not giving you a full return on investment then I want you to hold me accountable.? NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 15 of 20 DEPARTMENT OF JUSTICE l515 SW 5Lh Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 another e-mail Simon wrote that Gallant and Rosenblum ?are on a short string with me.? When asked under oath why Gallant was on a short string with Simon, Hooker testi?ed that ?be felt like Dr. Gallant could have been writing more presoriptions.? When asked if ?the problem [was] that the return on investment for payments to Dr. Gallant was low, Hooker responded, I would say yes.? Gallant himself con?rmed Hooker?s observation. In a sworn response to an interrogatory, Gallant wrote: ?As a result of my prescribing numbers being considered too low for the company, I was told that I would not be used as a speaker again.? Through its payments to Gallant and Rosenblum, Insys unconscionably sought to increase prescriptions written for Subsys. Gallant was chosen as a speaker not because he was quali?ed to speak to doctors about Subsys he was not - but to incentivize him to prescribe Subsys. Nonetheless, Insys deceptively held Gallant out as a quali?ed speaker and sought out Oregon physicians to attend his talks. Although Gallants prescribing of Subsys failed to meet Insys? expectations, Gallant was the top prescriber of Subsys in Oregon. Out of the total of $511,000 worth of in Oregon, Gallant wrote prescriptions worth almost $25 0,000, including $95,800 paid by the Public Employee Bene?ts Board (PEBB). In 2013, Gallant and Rosenblum were responsible for approximately 80% of all Subsys prescriptions ?lled in Oregon. For the years 2012 and 2013, Gallant, Rosenblum, and Blackburn were responsible for 78% of all Oregon Subsys prescriptions. Insys Deceptivelv Misrepresented that Subsys Should Be Used to Treat Mild Pain The de?nition for breakthrough cancer pain was critical for Insys because it determined the breadth of the only FDA approved use for which, under federal law, Subsys could be lawfully promoted. The broader the de?nition of BTCP, the wider the potential market for Subsys. To broaden the approved indication of BTCP, Insys de?ned BTCP to include mild pain. However, Subsys should never be prescribed solely to treat rnild pain because Subsys? risks far outweigh its bene?ts for this use. To achieve its goal of a broad de?nition of BTCP that NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 16 of 20 DEPARTMENT or JUSTICE 1515 sw 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 includes mild pain, knowingly fabricated a false citation to a paper written by RK Portenoy, a well-known researcher and clinician. As early as January 2011, the Board of Directors considered two possible de?nitions for BTCP. The ?rst de?nition came from the National Cancer Institute and de?ned BTCP as ?intense increases in pain that occur with rapid onset even when pain control medication is being used.? (Emphasis added). The second de?nition considered was a ?transitory exacerbation, or ?are, of moderate?to-severe intensity over persistent pain in patients receiving chronic opioid medication? and cited to a paper by RK Portenoy which de?ned BTCP as a ?transitory increase in pain to greater than moderate intensity which occurred on a baseline pain of moderate intensity or less (that is, to an intensity of rsevere 0r ?excruciating . 10 (Emphasis added). considered these two de?nitions at consultant meetings prior to product launch and chose to use the Portenoy de?nition. At the time of Subsys? launch in March 2012, Subsys promotional materials accurately cited the Portenoy de?nition. However, starting in June 2012, began to falsely cite Portenoy to de?ne BTCP as ?a ?are of mild?to-severe pain in patients with otherwise stable persistent pain.? Despite the fact that Portenoy?s de?nition expressly excluded mild and moderate pain and covered only severe or excruciating pain, Insys falsely cited Portenoy to include mild pain. The clear implication of deceptive citation to Portenoy was that it was appropriate and acceptable for doctors to prescribe Insys to treat even mild breakthrough pain. However, it is never appropriate and acceptable to prescribe Subsys to treat mild breakthrough pain because the potential harm to patients far exceeds any potential bene?t. These harms include addiction, diversion, and death. Improper use of opioids to treat mild pain can actually make pain worse, a condition known as opioid-induced hyperalgesia. Insys trained its sales representatives to use the deceptive de?nition of BTCP and to falsely cite Portenoy. Between June 2012 and September 2013, a deceptive Subsys Core Visual 1? Portnoy, RK, et a1, Breakthrough pain: de?nition, prevalence, and characteristics, 41 273 ?281 NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 17 of 20 DEPARTMENT OF JUSTICE 1515 SW 5th Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 Aid was used by sales representative to detail Oregon health care professionals. Sales representatives were expected to use the Core Visual Aid whenever they detailed Subsys to a health care provider or a provider?s of?ce. Between June 2012 and September 2013, Subsys sales representatives engaged in at least 830 such sales visits. Each time a sales representative used the deceptive BTCP de?nition in an Oregon presentation is a separate and distinct violation of the UTPA. BetweenOctober 12th, 2012 and November 26th, 2013, the deceptive BTCP de?nition was used in a slide that was presented at all Subsys promotional talks in Oregon. There were at least at least 23 presentations by four different speakers during this time period. Each time the slide was used is a separate and distinct violation of the UTPA. >14 If the Attorney General files a lawsuit, the Attorney General will allege that among other violations, this conduct violated the Oregon Unlawful Trade Practices Act, ORS 646.605 through ORS 646.656 by: 1) Implicitly misrepresenting to patients that Subsys should be used to treat migraine, neck pain, back pain and other off-label uses for which Subsys is neither safe nor effective. This implicit misrepresentation occurred when you paid patients? insurance co? payments even when you knew the prescription was off~label or contraindicated; when you arranged for free Subsys to be provided to patients even when you knew the free product was for an off?label or contraindicated use and when you advocated to obtain insurance payments to patients for Subsys when you knew Subsys was to be used for an off?label or contraindicated use. i 2) Implicitly misrepresenting to doctors that Subsys could be used to treat migraine, neck pain, back pain, and other off-label uses for which Subsys is neither safe nor effective. NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 18 of 20 DEPARTMENT or JUSTICE 1515 sw 5'h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673-1880 Implicitly misrepresenting that the doctor whom you paid to teach Oregon physicians about Subsys was quali?ed to prescribe and teach about Subsys when in fact, he was not quali?ed. 4) Misrepresenting that a paper written by a well?known doctor supported the de?nition of break through, cancer pain used by you to promote Subsys when in fact, the paper did not support the de?nition. 5) Misrepresenting that Subsys should be used to treat mild breakthrough cancer pain when in fact the potential harm of using Subsys to treat mild pain far outweighs any possible bene?t. 6) Employing an unconscionable tactic by making payments to doctors that you intended to be a kickback to incentivize the doctor to prescribe Subsys. 7) Employing an unconscionable tactic by targeting Subsys promotion at doctors who you knew, or should have known, misprescribed Schedule II opioid drugs such as Subsys. 8) Employing an unconscionable tactic by targeting doctors for Subsys promotion when you knew, or should have known, that the doctor only prescribed Subsys for off-label uses for which Subsys is neither safe nor effective. 9) Employing an unconscionable tactic by arranging for free Subsys to be provided to patients, and paying patients insurance co-payments for off-label uses of Subsys that you knew, or should have known, were neither safe nor effective. 10) Employing an unconscionable tactic by pressuring sales representative to solicit doctors to shorten the label mandated titration schedule designed to protect patients. If the Attorney General ?les the lawsuit, the Attorney General will ask the court to order you to pay: 1) Civil penalties of up to $25,000 for each Violation; 2) Restitution to anyone harmed by your acts; and 3) Our reasonable attorney's fees, costs and disbursements. NOTICE OF UNLAWFUL TRADE PRACTICES AND PROPOSED RESOLUTION Page 19 of 20 DEPARTMENT OF JUSTICE 1515 SW 5?h Ave Suite 410 Portland, OR 97222 PHONE: (971) 673?1880 1 In addiuon, the Anomey General may ask the com [0 permanently enjoin you from 2 conducting any aspect 11fany nade or commerce in me Stale 11f Oregon. 3 Dated this day of.1u1y,2o1s. 5 I David A 11m os13 #002750 6 Assistam Anomcy--m--Chargc I-Icalth Fraud LmUCnnsumcr Protection Seeuon 7 Oregon Depenment Mlusnce 1515 SW mm Ave,Su1(e 410 3 Portland, OR 97201 NOTICE OF UNLAWFUL TRADE PRACTICES PROPOSED RESOLUTION Page 20 of 20 DAII on 11131 KI: 1515 Pomalm,i)R771H PHONE