Fifteen months after a Derby nurse admitted taking drug-company kickbacks in exchange for prescribing a powerful opioid painkiller, a former district sales manager for the company was arrested Thursday on federal charges that he helped to orchestrate the kickback scheme.
Jeffrey Pearlman, of Edgewood, NJ, who was district sales manager for the New York region for Insys Therapeutics through 2015, and the sales representatives he managed “induced certain physicians, advanced practice registered nurses (APRNs) and physician assistants to prescribe the pharmaceutical company’s fentanyl spray by paying them to participate in hundreds of sham ‘Speaker Programs,’” according to a release from the U.S Attorney’s Office for Connecticut.
The scheme “defrauded federal healthcare programs” of millions of dollars that was paid out improperly for the drug, Subsys, which is approved for use only in cancer patients with breakthrough pain.
Federal prosecutors allege that Pearlman “personally profited” from the scheme through inflated quarterly bonuses he received that were based, in large part, on the sales results of the employees he managed.
Pearlman, who is no longer employed by Insys, could not be reached for comment Thursday.
The charges come as a nurse formerly employed by the Comprehensive Pain and Headache Treatment Center of Derby awaits sentencing on charges that she accepted kickbacks from Insys for writing large numbers of prescriptions for Subsys. C-HIT reported in June that the nurse, Heather Alfonso, was cooperating in an ongoing federal probe of Insys’ sales tactics.
While the complaint against Pearlman does not include names of the drug company or the cooperating witnesses, details of “cooperating witness 1” match prior details of Alfonso’s involvement. The complaint says she “encouraged co-workers to prescribe (Subsys) over similar medications because of the payments” she received from Insys under the sham speaker program.
In August, a C-HIT story revealed high Subsys prescribing by Alfonso and three other APRNs employed by the pain clinic. The four were responsible for nearly all of the state’s 2014 Medicare spending on Subsys, federal records show.
Only Alfonso has been charged. The director of the pain clinic, Dr. Mark Thimineur, has not been implicated.
Alfonso has admitted receiving about $83,000 in kickbacks from Insys through a sham speakers’ program – typically, dinners held at high-end restaurants that were supposed to be designed to gather healthcare providers and educate them about the drug. Instead, the events were “usually just a gathering of friends and co-workers, most of whom did not have the ability to prescribe the fentanyl spray, and no educational component took place,” the U.S. Attorney’s Office said.
“Speakers” were paid fees that ranged from $1,000 to several thousand dollars for attending the dinners. At times, the sign-in sheets for the program were forged, with Pearlman’s knowledge, so as to make it appear that the programs had an appropriate audience of healthcare professionals, federal prosecutors said.
While Pearlman authorized the payments to Alfonso, according to prosecutors, the affidavit references a second cooperating witness, formerly employed by Insys, who was involved in the scheme. That witness is assisting the government in exchange for not being charged, the complaint says.
In the affidavit, the witness believed to be Alfonso says she asked Pearlman, at one point, about the propriety of the “speaker” dinners.
“Don’t worry about the dinners,” she was told. “You just worry about writing scripts.”
Pearlman appeared Thursday before U.S. Magistrate Judge Sarah A. L. Merriam in New Haven and was released on a $200,000 bond.
The charge of paying or receiving kickbacks in relation to a federal healthcare program carries a maximum term of imprisonment of five years and a fine of up to $250,000.
The investigation by the U.S. Department of Health and Human Services Office of the Inspector General and the Federal Bureau of Investigation, with the assistance of the Drug Enforcement Administration’s Tactical Diversion Squad, is ongoing.