The former head of sales for an Arizona drug company pleaded guilty Wednesday for his role in a conspiracy to defraud insurance companies by bribing doctors to prescribe a highly addictive fentanyl-based pain drug when it wasn't needed, according to federal prosecutors and court documents.
The man, Alec Burlakoff, 44, of West Palm Beach, Florida, is former vice president of sales for Insys Therapeutics Inc. of Chandler, Arizona. Court documents show that Burlakoff agreed to cooperate with prosecutors in their case against Insys at a hearing Wednesday in U.S. District Court in Boston.
Prosecutors said Burlakoff is the highest-level executive to admit wrongdoing in their investigation of the company's billionaire founder, John Kapoor, and five other co-defendants, all of whom have pleaded not guilty.
Insys agreed to pay $150 million to settle related claims in August.
Burlakoff pleaded guilty to a single count of racketeering conspiracy in exchange for a likely reduction in the maximum sentence of 20 years in prison when he is sentenced next May. He will remain free until then, according to court documents.
An updated indictment filed in September accuses Kapoor and the others of having conspired to bribe doctors to prescribe the drug Subsys to boost sales and defraud insurers from 2012 to 2015.
Subsys, an under-the-tongue spray that manages pain in cancer patients, contains fentanyl, an opioid that the U.S. Drug Enforcement Administration says is 25 to 50 times more powerful than heroin. It is the drug that killed Prince.
According to the superseding indictment, Burlakoff and the others ran a sophisticated scheme that used pharmacy data to identify doctors who prescribed a lot of opioids. They then bribed the doctors with offers of cushy speaking engagements to increase their Subsys prescriptions even further and to write a minimum number of prescriptions at a minimum dose to generate as many insured refill orders as possible "without regard to the medical needs of ... Subsys patients," according tot he indictment.
In June 2017, Patty Nixon, an Insys sales representative-turned-whistleblower, told NBC News how the company lured doctors into prescribing the drug for patients who didn't need it.
"My job responsibilities were to contact insurance companies on behalf of the patients and the doctors to get the medication approved and paid for by their insurance company," said Nixon, who said she was fired after she stopped showing up for work because she felt guilty about lying on the job.
A 30-day supply of Subsys can cost as much as $30,000, generating sales of $240 million in 2016.
"It was absolutely genius," Nixon said. "It was wrong, but it was genius."