NEW YORK (Reuters) – Federal prosecutors on Friday brought charges against five New York doctors accused of taking kickbacks from Insys Therapeutics Inc in exchange for prescribing the company’s potent fentanyl-based cancer pain medication.
An indictment filed in Manhattan federal court said Gordon Freedman, Jeffrey Goldstein, Todd Schlifstein, Dialecti Voudouris and Alexandru Burducea received fees from Insys to participate as speakers in sham educational events.
Prosecutors also said that two former Insys employees who were first charged in 2016 in connection with the scheme, Jonathan Roper and Fernando Serrano, had secretly pleaded guilty and become cooperating witnesses.
The five doctors were arrested on Friday morning and face charges including that they violated the federal anti-kickback law and conspired to commit fraud. They pleaded not guilty on Friday before U.S. Magistrate Judge Sarah Netburn in Manhattan and were released on bail.
“We look forward to resolution of the charges,” said Nicholas Kaizer, a lawyer for Burducea, after the court hearing. The other defendants and their lawyers had no immediate comment.
The case is the latest in a series of medical practitioners and former Insys executives and employees facing criminal charges related to Subsys, the company’s potentially addictive fentanyl-based spray.
Federal prosecutors in Boston have accused seven former executives and managers at Insys, including billionaire founder John Kapoor, of participating in a scheme to bribe doctors to prescribe Subsys and to defraud insurers into paying for it. The seven have pleaded not guilty.
Insys has said it may need to pay at least $150 million towards part of a settlement with the U.S. Justice Department.
Chandler, Arizona-based Insys did not respond to a request for comment.
According to Friday’s indictment, the five doctors participated in Insys’ speaker programs, which were in reality social gatherings at high-end restaurants.
They earned kickbacks ranging from $68,000 and $308,000 and were among the top 20 prescribers of Subsys nationwide at some point during the scheme, prosecutors said.
In 2013 Goldstein and Schlifstein went to a strip club with Roper, an Insys sales manager; Serrano, an Insys sales representative; and an unnamed Insys executive, and Insys covered the $4,100 bill, which included lap dances, the indictment said.
Freedman, 57; Voudouris, 47; and Burducea, 41 have all been affiliated with New York’s Mount Sinai hospital, according to the hospital’s website. Schlifstein, 49, and Goldstein, 48, co-owned a private medical office on Manhattan’s Upper East Side.
Mount Sinai could not immediately be reached for comment.
Additional reporting by Nate Raymond in Boston; editing by Bernadette Baum and Rosalba O’Brien