Former Insys Therapeutics Vice President of Sales Sentenced for Racketeering Conspiracy

BOSTON – The former Vice President of Sales of Insys Therapeutics was sentenced today in federal court in Boston for his role in a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud healthcare insurers.

Alec Burlakoff, 46, of West Palm Beach, Fla., was sentenced by U.S. District Court Judge Allison D. Burroughs to 26 months in prison, three years of supervised release, and ordered to pay restitution and forfeiture to be determined at a later date. In November 2018, Burlakoff pleaded guilty to one count of racketeering conspiracy and agreed to cooperate with the government. 

In May 2019, five top executives including the Founder of Insys, John Kapoor, were convicted by a federal jury of racketeering conspiracy.

From May 2012 to December 2015, Burlakoff and his co-conspirators used various methods to bribe medical practitioners, many of whom operated pain clinics, to prescribe Subsys to patients, often when medically unnecessary. Subsys, a drug owned and manufactured by Insys Therapeutics, Inc., is a powerful, fentanyl-based pain medication approved to treat cancer patients suffering intense breakthrough pain.

One method employed by Burlakoff and his co-conspirators was the Insys Speaker Program (ISP), which was used as a vehicle to bribe doctors and other clinicians to prescribe Subsys to their patients. Insys sales representatives targeted and promised medical professionals the opportunity to be paid as Insys speakers if they wrote prescriptions for Subsys. The more prescriptions written for Subsys – and the higher the dose – the more speaking opportunities were awarded and more money paid to the practitioners. In many instances, the programs were shams.

At trial, Burlakoff testified about the methods used at Insys to induce doctors and nurse practitioners to prescribe Subsys in exchange for bribe payments. Burlakoff also described Insys’ practice of targeting medical practices known for suspect prescribing standards, commonly referred to as “pill mills”:

“[P]ill mills for us meant dollar signs. That's what we saw, dollar signs. It was not run the other way. It was run to the pill mill.”

Burlakoff also testified about the internal tracking Insys conducted to measure the effectiveness of the bribe payments:

“‘Return on investment’ means a successful bribe, an increase in Subsys prescriptions based on the speaker money we have paid the doctor, the speaker.”

The defendants also conspired to mislead and defraud health insurance providers who were reluctant to approve payment for Subsys when it was prescribed for non-cancer patients. The defendants achieved this by setting up the “Insys Reimbursement Center,” (IRC) which was dedicated to fraudulently obtaining prior authorization for payment directly from insurers and pharmacy benefit managers.   

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Phillip Coyne, Special Agent in Charge of the U.S Department of Health and Human Services, Office of the Inspector General; Judy McMeekin, Pharm.D. Acting Associate Commissioner for Regulatory Affairs of the U.S. Food and Drug; Brian D. Boyle, Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division; Leigh-Alistair Barzey, Special Agent in Charge of the Defense Criminal Investigative Service, Northeast Field Office; Carol S. Hamilton, Acting Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration, Boston Regional Office; Joseph W. Cronin, Inspector in Charge of the U.S. Postal Inspection Service’s Boston Division; Matthew Modafferi, Special Agent in Charge of the U.S. Postal Service Office of Inspector General, Northeast Area Field Office; Jeffrey K. Stachowiak, Acting Special Agent in Charge of the Department of Veterans Affairs, Office of Inspector General; and Thomas W. South, Deputy Assistant Inspector General for Investigations of the Office of Personnel Management made the announcement.

Assistant U.S. Attorneys K. Nathaniel Yeager, Fred M. Wyshak and David G. Lazarus prosecuted the case for Lelling’s Health Care Fraud Unit.