AG Brnovich Announces Former CEO of Insys Will Pay $2 Million For Role in Opioid Scheme

Banner announcing judgment in opioid case

 

PHOENIX — Attorney General Mark Brnovich today announced the former CEO of Insys Therapeutics, Michael Babich, will pay at least $2 million to settle allegations related to his role in an opioid scheme. In 2017, the Attorney General's Office (AGO) filed a lawsuit against Insys Therapeutics, several employees, and three Arizona doctors alleging that they engaged in an unlawful plot to increase the sale of Insys’ flagship opioid medication Subsys. In 2019, the AGO filed a second lawsuit against Insys’ founder and several former executives, including Mr. Babich, for engineering and engaging in that scheme.

“Insys and their executives must be held accountable for engaging in unethical and illegal behavior that helped fuel the opioid crisis in Arizona,” said Attorney General Brnovich. “This consent judgment is another step towards holding Insys Therapeutic accountable for their egregious conduct.”

The AGO alleged that Insys and its executives, including Mr. Babich, engaged in, directed, or authorized a quid pro quo arrangement with doctors where Insys paid the doctors as a reward for prescribing Subsys. The complaint further alleged that Insys and the executives engaged in, directed, or authorized a call center designed to ensure that insurance companies approved and paid for Subsys prescriptions by misrepresenting the patients’ medical information to the insurance companies.

If approved by the court, under the terms of the consent judgment, Mr. Babich will pay $2 million to the State, will cooperate fully with the State’s ongoing investigation into Insys Therapeutics and its executives, and will never sell or market pharmaceuticals in Arizona again. If Mr. Babich violates the terms of the agreement, he may be subject to over $600 million in additional penalties.

After Arizona sued it in 2017, Insys filed for bankruptcy in 2019. In addition, as part of a federal criminal case, Mr. Babich and other executives either pleaded guilty or were convicted by a jury of crimes involving allegations similar to those brought by the State. Under those rulings, Mr. Babich is obligated to pay tens of millions of dollars to federal authorities as well. Attorney General Brnovich continues to press forward with allegations against Insys’ founder, Dr. John Kapoor, and three Arizona doctors who engaged in the scheme.

Unit Chief Matthew du Mee, Senior Litigation Counsel Neil Singh, and Assistant Attorneys General Andrija Samardzich, Jennifer Bonham, and Samuel Fox are handling the cases for the State.

If you believe you have been the victim of consumer fraud, or would like to report a business engaging in consumer fraud, you can file a consumer complaint by visiting the Attorney General’s website. If you need a complaint form sent to you, you can contact the Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431.

Copy of proposed Consent Judgment.