Former Insys employee tells all about fraudulent scheme to boost painkiller profits

At Insys Therapeutics, Patty Nixon didn’t even last a year.

The former employee turned whistleblower said the stress of the job and the rampant fraud the Chandler-based company was committing became too much for her to handle.

“It was a big lie,” Nixon said. “It’s all fraud.”

State officials, federal investigators, and whistleblowers said Insys was involved in an elaborate and fraudulent scheme to boost profits for a powerful painkiller called Subsys.

Subsys is a spray form of fentanyl, an opioid, that is FDA-approved only for cancer patients with “breakaway pain.”

Since that’s a limited market and insurance companies won’t pay for the drug outside of the FDA’s approval, Nixon said Insys defrauded insurance companies by working with doctors to submit falsified patient records to say the patients had cancer when they didn’t.

How does Nixon know this?

“Because that was my job,” she said.

Nixon said for hours she would work the phones. Her and a small team of seven other people would push the false insurance claims through. By her estimate, 90 percent were fraudulent

“Most of the prescriptions and charts were for regular chronic pain, knee pain, menstrual cramps,” Nixon said. “Not cancer. Not cancer at all.”

So far, seven Insys executives are facing federal criminal charges that include racketeering and conspiracy charges.

At least one as already pleaded guilty – Elizabeth Gurrieri.

“She was my direct boss,” said Nixon, who testified before a grand jury and helped the FBI build their case.

Last week, the Arizona Attorney General’s Office filed a consumer fraud lawsuit against Insys.

The lawsuit makes Arizona the latest state attorney general’s office to bring a case against Insys, company executives and affiliated doctors.

“We need to put a stop to the unethical and greedy behavior in the pharmaceutical industry that is fueling the opioid crisis in our state,” said Attorney General Mark Brnovich in a written statement.

In a lengthy written statement posted on its website, Insys officials don’t dispute many of the allegations against the company.

“The allegations contained in the Arizona Attorney General’s complaint relate to former employees and physicians that are no longer associated with our Company or our speaker bureau,” according to the statement.

Insys officials said they are also cooperating in the Attorney General’s case.

Arizona’s lawsuit also names three state doctors as defendants: Steve Fanto, Nikesh Seth, and Sheldon Gingerich.

Nixon immediately recognized the names and told ABC15 she personally handled many of the claims coming out of their offices.

“We called them the whales,” she said.

The Attorney General’s Office said more than $33 million, or 64 percent, of Subsys sales in Arizona came from prescriptions written by Fanto, Seth and Gingerich. The three also allegedly collected sham “speaker fees” in exchange for writing the prescriptions, officials said.

Court records allege that Insys made hundreds of millions of dollars in its fraudulent scheme. A civil lawsuit filed in New Jersey alleges that the company’s actions led to one woman’s death.

Those are some of the many reasons Nixon said she decided to speak out.

“This was extremely dangerous,” she said. “People have died. People’s lives have been ruined. And this company did it for profit.”

Contact ABC15 Investigator Dave Biscobing at dbiscobing@abc15.com.

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