Almost overnight, a powerful new painkiller has become a $100 million business and a hot Wall Street story.
But nearly as quickly, questions are emerging about how the drug is being sold, and to whom.
The drug, Subsys, is a form of fentanyl, a narcotic that is often used when painkillers like morphine fail to provide relief. The product was approved in 2012 for a relatively small number of people — cancer patients — but has since become an outsize moneymaker for the obscure company that makes it, Insys Therapeutics. In the last year, the company’s sales have soared and its share price has jumped nearly 270 percent.
Behind that business success is an unusual marketing machine that may have pushed Subsys far beyond the use envisioned by the Food and Drug Administration. The F.D.A. approved Subsys only for cancer patients who are already using round-the-clock painkillers, and warned that it should be prescribed only by oncologists and pain specialists. But just 1 percent of prescriptions are written by oncologists, according to data provided by Symphony Health, which analyzes drug trends. About half of the prescriptions were written by pain specialists, and a wide range of doctors prescribed the rest, including general practice physicians, neurologists and even dentists and podiatrists.
The drug is a narcotic often used when other painkillers don’t provide relief.
Interviews with several former Insys sales representatives suggest the company, based in Chandler, Ariz., has aggressively marketed the painkiller, including to physicians who did not treat many cancer patients and by paying its sales force higher commissions for selling higher doses of the drug.
Under F.D.A. rules, manufacturers may market prescription drugs only for approved uses. But doctors may prescribe drugs as they see fit. Over the last decade, pharmaceutical companies have paid billions of dollars to settle claims that they encouraged doctors to use drugs for nonapproved treatments, or so-called off-label uses, to increase sales and profits.
Drug-safety experts said the range of medical professionals who appeared to be prescribing Subsys was troubling, particularly given concerns about the widespread use — and abuse — of narcotic painkillers. In December, Insys disclosed that it had received a subpoena from the federal health department’s Office of the Inspector General for documents related to its sales and marketing practices. The company has said it is cooperating with the investigation.
Medicine aside, Subsys is, much as anything, a Wall Street story. The explosive growth of Insys was fanned first by Wall Street investors betting the company’s sales and share price would rise. Now, other investors are betting the stock will decline. Over the last week, shares of Insys have lost roughly a third of their value, after the arrest on federal fraud charges of a Michigan neurologist who was a top prescriber of Subsys. In a statement, Insys said it took patient safety seriously and was committed to working with doctors to ensure its products were used properly.
Drug-safety experts said it was crucial that products like Subsys be marketed responsibly because the drugs are powerful, and powerfully addictive.
“You’re essentially spreading the accessibility to a very potent, rapid-onset narcotic to a large number of people, and a number of them may get addicted,” said Dr. Sidney M. Wolfe, founder and senior adviser to the Public Citizen Health Research Group, a consumer organization.
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Oral fentanyl products like Subsys have a history of being broadly prescribed. In 2008, the drug company Cephalon pleaded guilty to a criminal charge and paid $425 million in fines for inappropriate marketing of its products, including Actiq, a fentanyl lollipop, which federal officials said was being promoted for a range of unapproved uses, including treatment of migraines.
In 2007, Cephalon sought approval from the F.D.A. to market a newer fentanyl product, a dissolving pill called Fentora, for use in people without cancer. At the time, F.D.A. officials cited data showing the product was already being widely used by noncancer patients and they later denied the company’s application. Cephalon was acquired by Teva Pharmaceutical Industries in 2011.
Dr. Margaret A. Hamburg, the F.D.A. commissioner, said the agency did not regulate how doctors practice medicine. Still, she acknowledged that the widespread prescribing of oral fentanyl products for off-label uses was troubling, especially given the agency’s efforts to restrict the use of fentanyl and other opioids in the face of painkiller abuse. In the case of products like Subsys, prescribers must undergo training about the drug’s risks, pass a test and register in a national database. Patients must sign an agreement with their doctor before being prescribed the drug.
“It is frustrating, and we are in a process of continually assessing how our approaches are unfolding in the real world,” Dr. Hamburg said.
Several doctors said products like Subsys, which is sprayed under the tongue, fill an important role for seriously ill cancer patients, who may need the drug if their condition worsens or if their standard painkiller regimen occasionally fails to work.
“You want it to work as quickly as possible,” said Dr. Joshua R. Wellington, a pain specialist at Indiana University Health University Hospital. He is a paid speaker for Insys and said he prescribed it only to cancer patients. “In my mind, that’s what sets it apart.”
Still, Subsys has sold surprisingly well given the drug is approved only for cancer pain, and given that only a small number of oncologists, who are typically responsible for treating their patients’ pain, appear to be prescribing it. In addition to pain specialists and anesthesiologists, who together made up about half of all prescriptions, a significant number were written by neurologists and physical medicine and rehabilitation specialists, who often treat patients with a variety of pain conditions.
The former sales employees said that while the company targeted some oncologists, it placed more focus on high prescribers of competing products like Actiq and Fentora, regardless of whether those doctors treated cancer patients. They also said they were trained to mention the restriction to cancer pain at the beginning of the sales pitch and then to move on to a more general discussion of “breakthrough pain” in the doctors’ other patients.
Dr. Wellington said while he did not prescribe the drug off-label, he understood why some colleagues did. “Cancer pain is not a unique pain syndrome,” he said. “Pain is pain.”
At least part of Insys’s business strategy appears to rely on the assumption that patients will eventually need more of the drug, along with higher doses. Higher doses are more expensive than lower doses.
Comments from a Wall Street analyst underscore that view. “As Subsys grows more mature, we expect the number of experienced patients to grow,” Michael E. Faerm, an analyst for Wells Fargo, wrote last year in a note to investors. “As the experienced patients titrate higher, the average dose per prescription should increase.”
The former Insys sales representatives said they were paid more for selling higher doses.
Pratap Khedkar, who oversees the pharmaceutical practice at ZS Associates, a global sales and marketing firm, said such a practice was highly unusual because “most companies feel that is the doctor’s decision because it is very patient-specific.”
Many of the sales representatives were new to the pharmaceutical industry and were paid low base salaries, about $40,000 a year, compared with the industry standard of about $80,000, as an added incentive to rack up higher sales commissions, they said. Some said they were told they could make hundreds of thousands by selling aggressively.
Michael L. Babich, the chief executive of Insys, has attributed his company’s sales to its ambitious compensation structure. “We believe this is the most effective way to motivate our sales team,” he told analysts during an earnings call last fall.
On Tuesday, the company reported that Subsys sales continued to grow in the first quarter of this year, to $40.7 million, from $9.7 million a year ago.
Meanwhile, the company’s plans for Subsys are only just getting underway: Earlier this year, Insys announced that it intended to seek approval to market the product for a broader range of uses, including for children and burn patients, and to treat acute pain in emergency rooms.