JS44 CIVIL COVER SHEET (Re\'.12/12) {"11 - l11e JS 44 civil cover sheet and the informationcontained herein neither replace nor supplement the filing and service ~f'p1:;di1{g{d~~th:;rQp.ers as required bv law, except as provided b): l!)~al_ rules of_c';lurt.This form, ap~r?ved.by the Judicial C_onferenceof the United States in September 1974, is required forJth¢,4si'!(o'l\JlefIerk of Court for the purpose of 1mtiatmgthe CIVIi docket sheet. (S/:1, INSIIWC1WNS ON Nl,XT l'AGE OF THIS FOIU,f.) :f/, ·: l, ~ DEFENDANTS_, __ I. (a) PLAINTIFFS United States of America, ex. rel. Torgny Andersson [UNDER SEAL] lnsys Therapeutics, Inc. [UNDER SEAL]!; .': r, 1 ~ ~ I,• (b) County of Residence of First Listed Plaintiff / ;,; -,) (:#'; ,_,.... County of Residence of,FirstJ'..~t~~:plr~rfciai\ur,.,,..~---------- (f,~'(Cf:l'T IN US. l'I.AINTIFF CASES) (IN U.S. l'l.'AINTll"f•i'ASli;,J (}Nf.lJ NOTE: {C) Attorneys {Firm Name. Aclclress,a11clTeleplume Number) IN LAND CONDEMNATIONCASES'.iJ'sE THE LOCATIONOF THE TRACT OF LAND INVOLVED. Attorneys (If K11mr1V Jason W. Morgan (BBO #633802) Drohan Tocchio & Morgan, PC 175 Derby Street, Suite 30, Hingham, MA 02043; 781-749-7200 II. BASIS OF JURISDICTION t!'!I U.S. Go\'emment 0 3 Federal Question (U.S. Cim·erm11e111 Not a Part_y) 0 4 Diversity ((11clicate Cili=eml,ip of Parties in hem Ill) Plaintiff O 2 U.S. Government Defendant IV. NATURE OF I 0 0 0 0 0 0 0 0 0 0 0 0 l IO Insurance 120 Marine 130 Miller Act 140 Negotiable Instrument 150 RecoveryofOverpayment & Enforcement of Judgment 151 Medicare Act 152 Recovery of Defaulted Student Loans (Excludes Veterans) 153 Recovery of Overpayment ofVeteran's Benefits 160 Stockholders· Suits 190 Other Contract 195 Contract Product Liability 196 Franchise I 0 0 0 0 0 0 SUIT(Placea11 CONTRACT 210 Land Condemnation 220 Foreclosure 230 Rent Lease & Ejcctment 240 Torts to Land 245 Tort Product Liability 290 All Otlter Real Property (For Dirersily Cases 011/y) PTF Citizen of This State O I 0 2 0 2 Incorporateda11clPrincipalPlace of Business In AnotherState 0 5 0 5 Citizen or Subject of a Forei n Counhv 0 3 0 3 Foreign Nation 0 6 0 6 0 3 l OAirplane 0 315 Airplane Product Liability 0 320 Assault, Libel & Slander 0 330 Federal Employers' Liability 0 340 Marine 0 345 Marine Product Liability 0 350 Motor Vehicle 0 355 Motor Vehicle Product Liability 0 360 Other Personal lajmy 0 362 PersonalhtiuryMedicalMalpractice CIVIL RIGHTS FORFEITURF.JPENA LTY PERSONAL INJURY 0 365 Personal lnjuty Product Liability 0 367 Health Carel Phannaceutical Personal lnjuty Product Liability 0 368 Asbestos Personal lnjuty Product Liability PRISONER PETITIONS 0 0 0 0 440 Other Cid! Rights 441 Voting 442 Employment 443 Housing( Accommodations 0 445 Amer. w/DisabilitiesEmployment 0 446 Amer. w/DisabilitiesOther 0 448 Education 0 625 Drug Related Seizure of Property 21 USC 88 t 0 690 Other PROPERTY RIGHTS SOCIAL SECURITY LABOR Habeas Corpus: 0 463 Alien De1ainee 0 5 to !\-lotionsto Vacate Sentence 0 530 General 0 535 Death Penalty Other: 0 540 Mandamus& Other 0 550 Civil Rights 0 555 Prison Condition 0 560 Ci\'il Detainee Conditions of Confinement 0 0 0 0 0 Act 720 Laborl/\·lanagement Rdations 740 Railway Labor Act 751 Family and Medical Leave Act 790 Other Labor Litigation 79 I Employee Retirement Income Security Act OTHER STATlJTES BANKRUPTCY 0 422 Appeal 28 USC 158 0 423 Withdrawal 28 USC 157 0 820 Copyrights 0 830 Patent 0 840 Trademark PERSONAL PROPERTY 0 710 Fair Labor Standards 0 370 Other Fraud 0 371 Tmth in Lending 0 380 Other Personal Property Damage 0 385 Property Damage Product Liability DEF O l (l'/ace an ··,r i11One Boxji,r l'laill/iff amt One Box ji,r Defemlall/) PTF DEF Incorporatedor PrincipalPlace O 4 O 4 of Business In This State Citizen of Another State "X"i11011elJar011fy) TORTS PERSONAL INJURY REAL PROPERTY III. CITIZENSHIP OF PRINCIPAL PARTIES (Ptacea11"X"i11011eBox011lyJ 0 0 0 0 0 86 I HIA (1395ft) 862 Black Lung (923) 863 DIWC/DIWW(405(g)) 864 SSID Title XVI 865 RSI (405(g)) FEDERAL TAX SUITS 0 870 Taxes (U.S. Plaintiff or Defendant) 0 871 IRS-Titird Party 26 USC 7609 l ~ 375 False Claims Act 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 400 State Reapportionment 410 Antitrust 430 Banks and Banking 450 Commerce 460 Deportation 470 Racketeer Influencedand Conupt Organizations 480 Consumer Credit 490 Cable/Sat TV 850 Securities/Commodities/ Exchange 890 Other Statutoty Actions 891 Agricultural Acts 893 EnvironmentalMatters 895 Freedom oflnfonnation Act 896 Arbitration 899 AdministrativeProcedure Act/Reviewor Appeal of Agency Decision 950Constitutionalityof State Statutes IMMIGRATION 0 -162Naturalization Application 0 465 Other Immigration Actions V. 0 RIG IN (l'lace an ··.r i11One Box 011f.1') )8t I Original Proceeding O 2 Removed from State Court 0 3 Remanded from Appellate Court 0 4 Reinstated or Reopened 0 5 Transferred from Another District (.1-pec!fJ') 0 6 Multidistrict Litigation Cite the U.S. Civil Statute under which you are filing (Do ,wt citejuristlictimwl stl/111/es1111fess tlfrersil)'}: VI. CAUSE OF ACTION t-F_e_d_e_ra_l_F_a_ls_e_C_la_i_m_s_A_c_.t,_3_1_U_._S_.C_._S_e_c_t1o_n_3_7_2_9-'-, _et_s_e ___ q._. __________________ Brief description of cause: Qui Tam case filed under Federal False Claims Act VII. REQUESTED IN 0 CHECK IF THIS IS A CLASSACTION UNDER RULE 23, F.R.Cv.P. COMPLAINT: VIII. RELATED CASE(S) (S'e,:i11s1rm.·lim1s): IF ANY CHECK YES only if demandedin complaint: JURY DEMAND: ;s! Yes O No DEMANDS DOCKETNUMBER DATE 10/15/2013 FOR OFFICE USE ONLY RECEIPT ii AMOUNT JUDGE i'vlAG.JUDGE _ UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS UNITED STATES OF AMERICA EX REL. [UNDER SEAL] V. [UNDER SEAL] _____________ CANo. ------- ) ) ) Plaintiff, ) ) ) ) ) Defendant. ) ) ORIGINAL COMPLAINT FILED IN CAMERA AND UNDER SEAL 1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS UNITED STATES OF AMERICA EX REL. TORGNY ANDERSSON Plaintiff, V. ) ) ) ) C.A. No. ---------ORIGINAL COMPLAINT FOR VIOLATIONS OF THE FEDERAL FALSE CLAIMS ACT [31 U.S.C. §3729 et seq.]. ) INSYS THERAPEUTICS, INC. Defendants. ) ) ) ) FILED IN CAMERA AND UNDER SEAL JURY TRIAL DEMANDED Qui tam plaintiff/relator Torgny Andersson, through his attorneys at Wagstaff & Cartmell LLP and Drohan Tocchio & Morgan, P.C., on behalf of the United State of America, for his Complaint against Defendant Insys Therapeutics, Inc. alleges based upon personal knowledge, communications with other Insys Therapeutics, Inc. employees, and relevant documents, as follows: I. INTRODUCTION 1. This is an action to recover damages and civil penalties on behalf of the United States of America arising from false and/or fraudulent records, statements and claims made, used and caused to be made, used or presented by defendant Insys Therapeutics, Inc. ("Insys") and/or its agents, employees and co-conspirators in violation of the Federal Civil False Claims Act, 31 U.S.C. §3729 et seq., as amended ("the FCA" or "the Act"). 2 2. Since at least 2012, it has been Insys's practice to systematically and illegally promote its prescription drug Subsys for off-label indications. In addition to and in support of its off-label marketing efforts, Insys's sales force has offered and made unlawful financial inducements to providers to encourage them to prescribe Insys drugs. As alleged below, Insys disguises physician inducements as payments for "preceptorships" and speaking fees, among other things. 3. As a direct result oflnsys's improper practices, federal and state health insurance programs including, but not limited to, Medicaid, CHAMPUS/TRICARE, CHAMPY A , Federal Employee Health Benefits Program, and other federal health care programs have been caused to pay false or fraudulent claims for reimbursement of off-label uses of the Insys prescription drugs that would not have been paid but for the defendant's illegal business practices. 4. The False Claims Act was originally enacted during the Civil War, and was substantially amended in 1986. Congress amended the Act to enhance the Govermnent's ability to recover losses sustained as a result of fraud against the United States after finding that fraud in federal programs was pervasive and that the Act, which Congress characterized as the primary tool for combating government fraud, was in need of modernization. Congress intended that the amendments create incentives for individuals with knowledge of fraud against the Government to disclose the information without fear of reprisals or Government inaction, and to encourage the private bar to commit legal resources to prosecuting fraud on the Government's behalf. 5. The Act provides that any person who knowingly submits, or causes the submission of, a false or fraudulent claim to the U.S. Government for payment or approval is liable for a civil penalty of up to $11,000 for each such claim, plus three times the amount of the 3 damages sustained by the Government. Liability attaches when a defendant knowingly seeks payment, or causes others to seek payment, from the Government that is unwarranted. 6. The Act allows any person having information about a false or fraudulent claim against the Government to bring an action for himself and the Government, and to share in any recovery. The Act requires that the complaint be filed under seal for a minimum of 60 days (without service on the defendant during that time) to allow the Government time to conduct its own investigation and to determine whether to join the suit. 7. Based on these provisions, qui tarn plaintiff seeks through this action to recover on behalf of the United States damages and civil penalties arising from Insys's making or causing to be made false or fraudulent records, statements and/or claims in connection with its knowing off-label marketing of prescription drugs. Although Insys did not directly submit claims for prescription drugs to federal health insurance programs, it knew that its illegal offlabel marketing practices and illegal inducements would cause the submission of thousands of claims to these health programs for prescriptions that were not eligible for program reimbursement. II. PARTIES 8. Plaintiff/Relator Torgny Andersson is a resident of Jackson County, Missouri. Beginning in November 2012, Mr. Andersson was employed by Insys in a sales representative position in the Midwest. 9. Defendant Insys is a biopharmaceutical company, incorporated under the laws of the state of Delaware, and headquartered at a 444 South Ellis Street, Chandler, Arizona, 85224. Its primary business activity in the United States relates to the manufacture and/or sale of the drug at issue in this lawsuit: Subsys. 4 III. JURISDICTION AND VENUE 10. This Comi has jurisdiction over the subject matter of this action based on 28 U.S.C. § 1331, 28 U.S.C. § 1367 and 31 U.S.C. §3732, the latter of which specifically confers jurisdiction on this Comi for actions brought pursuant to 31 U.S.C. §§3729 and 3730. Under 31 U.S.C. §3730(e), there has been no statutorily relevant public disclosure of the "allegations or transactions" in this Complaint. Relator, moreover, would qualify under that section of False Claims Act as an "original source" of the allegations in this Complaint even had such a public disclosure occurred. 11. This Court has personal jurisdiction and venue over the defendant pursuant to 28 U.S.C. §3732(a) because that section authorizes nationwide service of process and because the defendants have minimum contacts with the United States. Moreover, the defendant can be found in, resides, or transacts or has transacted business in this District. 12. Venue is proper in this District pursuant to 31 U.S.C. §3732(a) because the defendant can be found in and transacts or has transacted business in this District. At all times relevant to this Complaint, defendant regularly conducted substantial business within this District, maintained employees and offices in this District, and made significant sales within this District. In addition, statutory violations, as alleged herein, occurred in this District. IV. BACKGROUND 13. The only prescription drug manufactured and/or distributed by defendant Insys in the United States is Subsys, the drug at the center of this Complaint. Subsys is a formulation of fentanyl that is sublingually administered by using a spray delivery device for the treatment of breakthrough cancer pain. Breakthrough cancer pain is characterized by sudden intense episodes of severe pain which occur despite the presence of other pain medication in the body. Subsys 5 acts as a transmucosal immediate release fentanyl product and is absorbed through a mucous membrane such as the inside of the cheek. 14. Insys' activities relating to the manufacture, marketing, and sale of prescription phaimaceuticals such as Subsys are regulated by the United States Food and Drug Administration ("FDA") as alleged below. Subsys was first approved by the FDA on January 5, 2012. Subsys has been approved for breakthrough cancer pain in cancer patients who are 18 years of age or older who are already receiving and are tolerant of opioid therapy for their underlying persistent cancer pain. 15. At all times relevant to this Complaint, Insys had a sales and marketing staff dedicated to sales and promotion of Subsys. The Subsys narrow FDA-approved indication limits the potential sales growth of the drug. As alleged below, to grow drug sales in a constrained environment, Insys resorted to marketing strategies prohibited by federal and state laws. V. APPLICABLE LAW A. The FDA Regulatory Scheme 16. Under the Food, Drug, and Cosmetics Act ("FDCA"), 21 U.S.C. §§301-97, new pharmaceutical drugs cannot be marketed in the United States unless the sponsor of the drug demonstrates to the satisfaction of the FDA that the drug is safe and effective for each of its intended uses. 21 U.S.C. §355(a) & (d). Approval of the drug by the FDA is the final stage of a multi-year process of study and testing. 17. The FDA does not approve a drug for treatment of sickness in general. Instead, a drug is approved for treatment of a specific condition, for which the drug has been tested in patients. The specific approved use is called the "indication" for which the drug may be 6 prescribed. The FDA will specify particular dosages determined to be safe and effective for each indication. 18. The indication and dosages approved by the FDA are set forth in the drug's labeling, the content of which is also reviewed by the FDA. 21 U.S.C. §§352, 355(d). An example of the drug's labeling is the printed insert in the drug's packaging. The FDA will only approve the new drug application if the labeling conforms to the uses and dosages that the FDA has approved. 21 U.S.C. 355(d). 19. Under the Food and Drug Administration Modernization Act of 1997 ("FD AMA"), if a manufacturer wishes to market or promote an approved drug for alternative uses - i.e., uses not listed on the approved label - the manufacturer must resubmit the drug for another series of clinical trials similar to those for the initial approval. 21 U.S.C. §360aaa(b) & (c). Until subsequent approval of the new use has been granted, the unapproved use is considered to be "off-label." "Off-label" refers to use of an approved drug for any purpose, or in any manner, other than what is described in the drug's labeling. Off-label use includes treating a condition not indicated on the label, treating the indicated condition at a different dose or frequency than specified in the label, or treating a different patient population (~, treating a child when the drug is approved to treat adults). 20. Although the FDA is responsible for ensuring that a drug is safe and effective for the specific approved indication, the FDA does not regulate the practice of medicine. Once a drug is approved for a particular use, the FDA does not prohibit doctors from prescribing the drug for uses that are different from those approved by the FDA. 21. Although physicians may prescribe drugs for off-label usage, the law prohibits drug manufacturers from marketing or promoting a drug for a use that the FDA has not 7 approved. Specifically, under the Food and Drug laws, (1) a manufacturer may not introduce a drug into interstate commerce with an intent that it be used for an off-label purpose, and (2) a manufacturer illegally "misbrands" a drug if the drug's labeling (which includes all marketing and promotional materials relating to the drug) describes intended uses for the drug that have not been approved by the FDA. 21 U.S.C. §§331, 352. 22. An off-label use of a drug can cease to be off label only if the manufacturer submits a supplemental application and demonstrates to the satisfaction of the FDA that the product is safe and effective for the proposed new use. 21 U.S.C. §360aaa(b) & (c). 23. In addition to prohibiting manufacturers from directly marketing and promoting a product's off-label uses, Congress and the FDA have also sought to prevent manufacturers from employing indirect methods to accomplish the same end. For example, Congress and the FDA have attempted to regulate two of the most prevalent indirect promotional strategies: (1) manufacturer dissemination of medical and scientific publications concerning the off-label uses of their products, and (2) manufacturer support for Continuing Medical Education (CME) programs that focus on off-label uses. 24. With regard to the first practice - disseminating written information - the FD AMA only permits a manufacturer to disseminate info1mation regarding off-label usage in response to an "unsolicited request from a health care practitioner." 21 U.S.C. §360aaa-6 (emphasis added). In any other circumstance, a manufacturer is permitted to disseminate information concerning the off-label uses of a drug only after the manufacturer has submitted an application to the FDA seeking approval of the drug for the off-label use; has provided the materials to the FDA prior to dissemination; and the materials themselves must be in an unabridged form and must not be false or misleading. 21 U.S.C. §§ 360aaa(b) & (c); 360aaa-1. 8 25. With regard to manufacturer involvement in CME programs, the FDA's examination of these practices led to publication of an agency enforcement policy in 1997 entitled, "Guidance for Industry: Industry-Supported Scientific and Educational Activities," 62 Fed. Reg. 64,070, 64,093, 1997 WL 740420 (F.R.) (1997). This guidance document states that CME programs must be truly independent of the drug companies, and sets forth a number of factors that the FDA will consider in determining whether a program is "free from the supporting company's influence and bias." Id. These factors include, among others, an examination of the relationship between the program provider and supporting company, the company's control of content and selection of presenters, whether there is a meaningful disclosure of the company's funding and role in the program, whether multiple presentations of the same program are held, whether the audience is selected by the sales and marketing department of the company, and whether information about the supporting company's product is disseminated after the initial program other than in response to an unsolicited request. Id. The promotion of off-label drug uses at a CME program which fails this test of "independence" violates Congress' off-label marketing restrictions. 26. In sum, the off-label regulatory scheme protects patients and consumers by insuring that drug companies do not promote drugs for uses other than those found to be safe and effective by an independent, scientific governmental body, the FDA. B. Prescription Drug Reimbursement Under Federal Health Care Programs 27. Whether a drug is FDA-approved for a particular use will largely determine whether a prescription for that use will be reimbursed under Medicaid and other federal health care programs. 9 1. The Medicaid Program 28. Medicaid is a public assistance program providing for payment of medical expenses for low-income patients. Funding for Medicaid is shared between the federal government and state governments. The Medicaid program subsidizes the purchase of more prescription drugs than any other program in the United States. 29. Although Medicaid is administered on a state-by-state basis, the state programs adhere to federal guidelines. Federal statutes and regulations restrict the drugs and drug uses that the federal government will pay for through its funding of state Medicaid programs. Federal reimbursement for prescription drugs under the Medicaid program is limited to "covered outpatient drugs." 42 U.S.C. §1396b(i)(l), 1396r-8(k)(2), (3). Covered outpatient drugs are drugs that are used for "a medically accepted indication." Id. § 1396r-8(k)(3). 30. A medically accepted indication, in tum, is a use which is listed in the labeling approved by the FDA, or use of which is supported by one of the drug compendia identified in the Medicaid statute. Id. § 1396r-8(k)(6). During the time period relevant to this Complaint, many of the off-label uses of the drug promoted by Insys were not eligible for reimbursement from Medicaid because such off-label uses were neither listed in the labeling approved by the FDA nor otherwise supported as safe and effective by any of the drug compendia specified by the Medicaid statute. Upon information and belief, use of Subsys, for example, on an outpatient basis for breakthrough pain other than cancer pain is not supported by the compendia as medically safe and effective, although Insys has promoted the drug for that use in the ways set forth below. 31. Additionally, because Insys's unlawful off-label marketing efforts were designed to generate overutilization of their drugs in situations in which the drugs either were not proven 10 safe and effective or were not medically necessary for treatment of patients' specific medical conditions, Insys caused physicians to submit claims for reimbursement to Medicaid that were unwarranted and therefore false. 2. Other Federal Health Care Programs 32. In addition to Medicaid, the federal government reimburses a portion of the cost of prescription drugs under several other federal health care programs, including but not limited to CHAMPUS/TRICARE, CHAMPY A and the Federal Employees Health Benefit Program. 33. CHAMPUS/TRICARE, administered by the United States Department of Defense, is a health care program for individuals and dependents affiliated with the armed forces. CHAMPY A, administered by the United States Department of Veterans Affairs, is a health care program for the families of veterans with 100 percent service-connected disability. The Federal Employee Health Benefit Program, administered by the United States Office of Personnel Management, provides health insurance for federal employees, retirees, and survivors. Coverage of off-label drug use under these programs is similar to coverage under the Medicaid program. See,~' TRICARE Policy Manual 6010.47-M, Chapter 7, Section 7.1 (b) (2) (March 15, 2002); CHAMPY A Policy Manual, Chapter 2, Section 22.1, Art. II (A)(2) (June 6, 2002). 34. During the time period relevant to this Complaint, the off-label uses of Subsys promoted by Insys did not qualify for reimbursement under any of the various federal health care programs because there was inadequate approval or support for such drugs to be eligible for reimbursement and/or because Insys's unlawful marketing activity created overutilization of such drug in situations where they were not medically necessary for treatment of patients' specific medical conditions. 11 3. The Anti-Kickback Statute 35. The federal health care Anti-Kickback statute, 42 U.S.C. §1320a-7b(b), arose out of Congressional concern that payoffs to those who can influence health care decisions will result in goods and services being provided that are medically unnecessary, or poor quality, or even harmful to a vulnerable patient population. To protect the integrity of federal health care programs from these difficult to detect harms, Congress enacted a prohibition against the payment of kickbacks in any form, regardless of whether the particular kickback actually gives rise to overutilization or poor quality of care. 36. The Anti-Kickback statute prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending or arranging for the purchase of any item for which payment may be made under a federally-funded health care program. 42 U.S.C. § 1320a-7b(b). Under this statute, drug companies may not offer or pay any remuneration, in cash or kind, directly or indirectly, to induce physicians or others to order or recommend drugs that may be paid for by Medicaid, CHAMPUS/TRICARE, CHAMPY A, Federal Employee Health Benefit Program, or other federal health care program. 37. The law not only prohibits outright bribes and rebate schemes, but also prohibits any payment by a drug company to a physician which has as one of its purposes inducement of the physician to write additional prescriptions for the company's pharmaceutical products. 38. Concern about improper drug marketing practices like those alleged in this Complaint prompted the Inspector General of the Department of Health and Human Services to issue a Special Fraud Alert in 1994 concerning prescription drug marketing practices that violated the Anti-Kickback law. Special Fraud Alert: Prescription Drug Marketing Schemes, 59 Fed. Reg. 65,376 (Dec. 19, 1994). Among the improper practices cited by the Inspector General 12 are drug companies' payments to physicians where the physician had offered no particular services of benefit to the drug company but the payment appeared to have been based on the volume of business the doctor could generate for the drug company. Id. 39. Compliance with the Anti-Kickback law is a precondition to participating as a health care provider under the Medicaid, CHAMPUS/TRICARE, CHAMPY A, Federal Employee Health Benefit Program, and other federal health care programs. With regard to Medicaid, for example, each physician and pharmacist that participates in the program must sign a provider agreement with his or her State. Although there are variations in the agreements among the states, the agreement typically requires the prospective Medicaid provider to agree that he or she will comply with all Medicaid requirements, which include the anti-kickback provisions of the law. In Massachusetts and a number of other states, the Medicaid claim form itself contains a ce1iification by the provider that the provider has complied with all aspects of the Medicaid program, including compliance with Federal laws. In sum, either pursuant to provider agreements, claims forms, or other appropriate manner, pharmacists and physicians who participate in a federal health care program generally must certify that they have complied with the applicable federal rules and regulations, including the Anti-Kickback law. VI. ALLEGATIONS 40. To grow sales of Subsys, a drug with limited approval and a limited consumer base, Insys has engaged in an extensive fraudulent marketing scheme. Insys' fraudulent scheme grossly disregards Food and Drug laws prohibiting pharmaceutical manufacturer promotion of drugs off-label. 41. Although Insys did not directly provide Subsys to federal and state health insurance programs or issue prescriptions for the drug, it embarked on a course of unlawful 13 conduct that it knew would lead to the submission by physicians and pharmacists of thousands of claims for Subsys when such prescriptions were not eligible for federal or state health care program reimbursement. Insys knew their actions would inevitably cause these providers to submit false claims to the federal and state governments. Accordingly, Relator Andersson, on behalf of the United States, seeks to hold defendants liable for knowingly causing these false claims to be presented to the United States for payment in violation of 31 U.S.C. § 3729. 42. As set forth more fully below, Insys pursued aggressive marketing goals for Subsys by promoting it for uses that the FDA had not found were safe or effective, and for uses that were not approved for reimbursement by Medicaid, CHAMPUS/TRICARE, CHAMPY A, Federal Employee Health Benefits Program, and other federal health care programs. 43. As stated, Subsys' sole FDA-approved use is for treating breakthrough cancer pain in opioid tolerant patients. "Breakthrough" cancer pain is a flare of moderate to severe spike of pain that "breaks through" medication cancer patients use to control their persistent pain. Subsys' side effects are typical of opioids, and can range from somnolence, nausea, vomiting and dizziness to respiratory depression, which can be life threatening. 44. Further, like all opioid medications, Subsys is susceptible to misuse and addiction. In fact, because of the risk of misuse, abuse, addiction and overdose, Subsys is available only through a restricted program called the TIRF REMS Access program. Although the general effectiveness of opioids like Subsys in treating various forms of pain is well known, opioids raise safety concerns as a primary danger raised by off-label use of this drug. For that reason, among others, serious concern should be raised about the inherent risks of Insys' marketing decision to promote off-label use of Subsys to doctors who might not have the 14 experience with opioids necessary to fully appreciate the dangers of the drug even with a restricted access program in place. 45. Insys began marketing Subsys through a group of sales representatives and managers who specialized in the product and who made sales calls primarily to pain specialists and oncologists. Within four months of launch, new sales leadership who had previously been with a company called Cephalon, Inc. sought to maximize sales and thus began focusing efforts on expanding sales for off-label uses of its sole marketed product - Subsys. 46. As a result of efforts by those sales leaders to expand the market to off-label pain applications in pain management, the sales of Subsys increased from $2.5 million in 2012 to $23.4 million by June 30, 2013. 47. Specifically with a view toward expanding the market to off-label pain applications even further, by fall of 2012, Insys expanded its sales force so that now its sales representatives and managers market Subsys to a broader group of physicians that includes internists, general practitioners, family practitioners, rheumatologists and neurologists who are likely to prescribe the medication for non-cancer pain and/or chronic pain. 48. Despite concerns about Subsys' serious risks and propensity for misuse and addiction, and despite the lack of scientific studies or compendia discussion that support the safety and efficacy of Subsy for any of the wide variety of off-label pain treatments it promotes, Insys has elected to change its marketing model so that more sales representatives with less expertise about the drug are now marketing the product to a larger pool of physicians (also with less expertise in cancer pain management and opioids) in an effort to further accelerate the growth of off-label use of the product. 15 49. Insys continues to pay lip service in its written materials to FDA's prohibitions against off-label marketing of prescription drugs, so as to give the false appearance of compliance. However, through oral and written directives and by altering its marketing program design, Insys increasingly pressured its sales force to target inappropriate medical specialists and to engage in kickbacks and other illegal remunerations in order to reach demanded levels of sales of Subsys. 50. Insys has also developed strategies to lure potentially-large off-label prescribers through financial inducements. Among these is the payment by Insys sales representatives of potentially high-prescribing physicians to speak at breakfast, lunch or dinner presentations to other physicians. 51. Insys often pays these speakers between $1200 and $2400 for talking even if the event is as short as fifteen minutes long. Sometimes the speakers are paid although they never speak to any other physicians. They are paid to speak to no one although attendance forms may be falsified to give the appearance that other physicians attended the engagement. 52. The more Subsys prescriptions a physician writes, particularly for off-label uses, the more likely Insys is to continue to pay the physician to hold speaking engagements. 53. Insys sales representatives are also encouraged to dine with physicians who may have a high propensity to prescribe off label. In fact, sales managers instruct their sales representatives to take the manager's company credit card information and use it to dine with these physicians. 54. Insys' sales model with respect to Subsys is eerily similar to the off-label marketing scheme of Cephalon, Inc. of its promotions of Actiq - another oral transmucosal fentanyl delivery system via a lollipop with FDA approval for use in treating breakthrough 16 cancer pain in opioid tolerant patients. In 2008 Cephalon Inc. settled with federal prosecutors over charges that it illegal off-label marketed Actiq, as well as two other drugs, for $425 million. 55. In fact, a number of Insys sales managers were formerly with Cephalon, and appear to have brought Actiq's marketing scheme to Insys for the promotion of Subsys. Count! Federal False Claims Act 31 U.S.C. §§3729(a)(l) and (a)(2) 56. Relator realleges and incorporates by reference the allegations contained in paragraphs 1 through 55 of this complaint. 57. This is a claim for treble damages and penalties under the False Claims Act, 31 U.S.C. §3729, et seq., as amended. 58. By virtue of the acts described above, defendants knowingly presented or caused to be presented, false or fraudulent claims to the United States Government for payment or approval. 59. By virtue of the acts described above, Insys knowingly made, used or caused to be made or used false records and statements, and omitted material facts, to induce the Government to approve and pay such false and fraudulent claims. 60. Each prescription that was written as a result of defendant's illegal marketing practices and/or illegal inducements represents a false or fraudulent record or statement. And, each claim for reimbursement for such off-label or illegally induced prescriptions submitted to a federal health insurance program represents a false or fraudulent claim for payment. 61. Relator cannot at this time identify all of the false claims for payment that were caused by Insys' s conduct. The false claims were presented by thousands of separate entities, 17 across the United States, and over many months. Relator has no control over or dealings with such entities and has no access to the records in their possession. 62. The Government, unaware of the falsity of the records, statements and claims made or caused to be made by the defendant, paid and continues to pay the claims that would not be paid but for Insys's illegal off-label marketing practices and illegal inducements. 63. By reason of the defendant's acts, the United States has been damaged, and continues to be damaged, in substantial amount to be determined at trial. Federal health insurance programs have paid many claims, amounting to many hundreds of thousands of dollars, for off-label prescriptions for indications that were not approved by the FDA and/or for prescriptions that were illegally induced by Insys. PRAYER FOR RELIEF WHEREFORE, Relator prays for judgment against the defendants as follows: 1. That defendant cease and desist from violating 31 U.S.C. §3729 et seq., and the equivalent provisions of the state statutes set forth above; 2. That this Court enter judgment against defendant in an amount equal to three times the amount of damages the United States has sustained because of defendant's actions, plus a civil penalty of not less than $5,000 and not more than $11,000 for each violation of 31 U.S.C. §3729; 3. That Relator be awarded the maximum amount allowed pursuant to §3730(d) of the federal False Claims Act, and the equivalent provisions of any applicable state statutes; 4. That Relator be awarded all costs of this action, including attorneys' fees and expenses;and 5. That Relator recover such other relief as the Court deems just and proper, or that is necessary to make Relator whole. 18 Demandfor Jury Trial Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Relator hereby demands a trial by jury. Respectfully Submitted, Dated: October 15, 2013 Drohan Tocchio & organ, P.C. 175 Derby Street, Suite 30 Hingham MA 0204 3 (781) 749-7200 FAX: (781) 740-4335 OF COUNSEL: Brian J. Madden (to be admitted pro hac vice) Thomas J. Preuss (to be admitted pro hac vice) Wagstaff & Cartmell, LLP 4740 Grand Ave., Suite 300 Kansas City MO 64112 (816) 701-1100 FAX: (816) 531-2372 bmadden@wcllp.com tjpreuss@wcllp.com ATTORNEYSFORRELATOR 19