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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of Alabama

FOR IMMEDIATE RELEASE
Thursday, July 13, 2017

Insys Regional Manager Pleads Guilty to Kickback Conspiracy

Acting United States Attorney Steve Butler of the Southern District of Alabama announces that Karen Hill, the former Insys Therapeutics Regional Manager for the southeastern United States, has pled guilty to conspiring to pay illegal kickbacks to doctors in exchange for their prescribing the instant-release fentanyl drug Subsys.

In June 2012, Karen Hill was hired by Insys Therapeutics to be a sales representative in Florida for the instant-release fentanyl drug Subsys.  Prior to coming to Insys, Hill was a sales representative for Cephalon, Inc. where she gained experience selling another instant-release fentanyl drug under the brand name Actiq.  During the course of her employment at Cephalon, Cephalon agreed to pay $425 million to the Department of Justice to resolve allegations of illegal marketing practices involving Actiq.

Subsys is only FDA approved for “the management of breakthrough pain in cancer patients 18 years of age and older who are already receiving and who are tolerant to opioid therapy for their underlying persistent cancer pain.”  Despite this very limited FDA indication, Insys initially tasked Hill with getting pain management doctors in Florida to prescribe Subsys to their patients.  As a sales representative, Hill was initially responsible for working directly with doctors in Florida, particularly in the Jacksonville, Tampa, Orlando, and Miami metro areas.

During her time as a sales representative, Hill taught other sales representatives how to entice doctors to prescribe Subsys.  In one recorded conversation, Hill told another sales representative that the key to getting doctors to prescribe Subsys was not selling them on the drug itself, but rather finding out what motivated the doctor.  She gave examples that some of her doctors were motivated by money, chocolate, and spending time with her.  When the sales representative asked Hill how to identify doctors who were financially motivated to prescribe Subsys, Hill explained that she looks for doctors that are “money hungry,” and went on to describe how to figure out if a doctor has a “light in their eyes” and is willing to “play ball.”

In August 2013, Hill was promoted to be the Insys Regional Director for a territory that covered Florida and Mobile, Alabama.  In this role, she oversaw and facilitated the payment for speaking programs to certain doctors, including Dr. Xiulu Ruan and Dr. John Patrick Couch.    These payments were made as an inducement, and in exchange for, these doctors continuing to prescribe Subsys to their patients.  Hill was a manager at various levels in the southeast region during the rest of her career at Insys.

For certain high prescribing doctors, Hill admitted that she conspired with others within Insys to pay these doctors illegal kickbacks in the form of speaking fees.  The way the scheme worked was that doctors who were prescribing high volumes of Subsys, or those who had the ability to do so in short order, were signed up by Insys as “speakers.”  The doctors would put on short presentations about the drug and then would receive an honorarium ranging typically ranging from $1,600.00 to $3,000.00.  As part of her plea, Hill admitted that the speaking programs were merely a pretext through which Insys could line the pockets of certain doctors.

In February 2017, Dr. Ruan and Dr. Couch, who practiced in Mobile, Alabama, were convicted by a federal jury in Mobile of numerous charges related to their pain management practice, including receiving illegal kickbacks from Insys.  During that trial, former Insys sales representative Natalie Perhacs testified against the doctors.  Prior to her testimony, Perhacs had pled guilty to conspiring to pay illegal kickbacks to Dr. Ruan and Dr. Couch in exchange for their prescribing Subsys.  Dr. Ruan and Dr. Couch were sentenced to 21 years and 20 years in federal prison, respectively.  Perhacs still awaits sentencing. 

Hill is just one of several former Insys employees that have pled guilty to felony charges in several different districts.   She is scheduled to be sentenced in January 2018.

Following Hill’s guilty plea, Acting United States Attorney Steve Butler stated, “This is a very important development in this ongoing case.  Ms. Hill was a high-level manager within Insys, and was a key player in the conspiracy to pay doctors illegal kickbacks in exchange for prescribing Subsys to their patients.  As we saw during the trial of Dr. Ruan and Dr. Couch, Subsys is an extremely potent drug that can have devastating consequences if it is prescribed to patients who should not be taking instant-release fentanyl.”

DEA ASAC, John (Bret) Hamilton, stated, “The evidence was overwhelming that the motivation for this crime was financial gain.  The DEA will continue to target corrupt individuals in the medical industry with vigor.  Americans should not have to worry whether or not their doctors have been influenced to prescribe a life-altering drug without a legitimate need.  They should be able to trust the advice and prescriptions they are given are for their best health, not the financial gain of others.”  

FBI SAC, Rob Lasky stated, “This case is a testament to the dedicated men and women who have investigated and prosecuted this case. This particular case would have placed a strain on any one agency’s resources but with the inter agency cooperation that was so evident here these defendants have been put on notice that this type of behavior in the medical community will not be tolerated.”

This OCDETF case was jointly investigated by the DEA-Mobile and FBI-Mobile, and was prosecuted by Assistant United States Attorneys Christopher Bodnar and Deborah Griffin.

Updated July 13, 2017