A securities class action suit was filed against a pharmaceutical company following allegations that it and certain officers violated federal securities laws.
Insys allegedly involved in the illegal promotion of product
The lawsuit against Insys Therapeutics Inc. was filed in the U.S. District Court for the District of Arizona on behalf of investors who purchased shares in the company during the class period between March 3, 2015 through Jan. 25, 2016, according to a press release. Insys is a commercial-stage specialty pharmaceutical company that works to develop and market supportive care products. These products focus on pain management stemming from disease, treatment or therapy. The company’s most well-known source of revenue is called Subsys, sublingual fentanyl spray developed to treat breakthrough cancer pain in opioid-tolerant patients.
“The company’s most well-known source of revenue is Subsys.”
The class action filing alleges that Insys made materially false and misleading statements to investors and/or failed to disclose certain facts about the company. For example, the lawsuit claims that Insys marketed Subsys illegally and in an improper, off-label manner. It goes on to allege that certain company employees, including Michael Babich, president and CEO of the company for most of the class period, participated in an illegal kickback scheme designed to increase Subsys prescriptions.
SIRF article alleges illegal and off-label use and sales of Subsys
On Jan. 25 the Southern Investigating Report Foundation published an article called “The Brotherhood of Thieves: Insys Therapeutics.” The SIRF had been trying to determine how a product as strictly regulated by the Food and Drug Administration as Subsys could experience insurance approval rates twice as high as competitors. The report the organization eventually published on Insys alleged that the company placed pressure on its employees to come up with new strategies to push the illegal and off-label use and sales of Subsys. The report cited internal Insys documents and audio recordings that included evidence of company executives attempting to think up ways around the FDA’s increasingly strict pharmacy benefit manager rule enforcement.
After the SIRF report was published, Insys securities dropped $1.07 per share, or nearly 5 percent, to close at $21.58 per share on Jan. 25.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or email@example.com.