Insys Therapeutics' General Counsel Kept Behind the Scenes in Plea Deal, Compliance Reforms
Mark Nance's name was not on the five-year deferred prosecution agreement that Insys accepted, nor on the five-year corporate integrity agreement—which the government called an “unprecedented” deal.
June 06, 2019 at 05:43 PM
5 minute read
The original version of this story was published on Corporate Counsel
General counsel Mark Nance joined Insys Therapeutics Inc. in October as the company was working toward settling civil and criminal allegations that it bribed doctors to prescribe one of its popular opioid drugs. But if Nance was part of the $225 million global settlement announced Wednesday, there was no outward sign of it.
Nance's name was not on the five-year deferred prosecution agreement that Insys accepted, nor on the five-year corporate integrity agreement—which the government called an “unprecedented” deal. It includes a “conditional exclusion release” that allows the government to exclude the company from federal contracts, such as Medicare, if it materially breaches the terms.
Instead of Nance, the name of chief financial officer and non-lawyer Andrece Housley was on the documents, along with outside counsel Geoffrey Hobart from the Washington office of Covington & Burling. Hobart did not immediately return messages.
Housley, an accountant, also signed the brief 8-K document the company filed Thursday with the U.S. Securities and Exchange Commission announcing both the agreement and the resignation of two members of the board of directors.
Nance and Housley could not be reached for comment Thursday, and neither the Phoenix, Arizona-based company nor its public relations firm returned messages seeking comment.
The integrity agreement prohibits both Nance and Housley from overseeing compliance. The deal, in which Insys admits the facts and accepts responsibility for the wrongdoing, calls for the appointment of a compliance officer who “shall report directly to the chief executive officer of Insys; and shall not be, or be subordinate to, the general counsel or chief financial officer or have any responsibilities that involve acting in any capacity as legal counsel or supervising legal counsel functions for Insys.”
The agreement, between Insys and the U.S. Department of Health & Human Services' office of inspector general, lists several pages of required compliance reforms, periodic reports and employee training.
Since 2017, the company has undergone a massive change in executive leadership to deal with the government investigation, including Nance, Housley and CEO Andrew Long. Eight former executives, including founder and chairman of the board John Kapoor and a former CEO, have been convicted in the bribery scheme. Kapoor still holds a majority of shares in the company.
The integrity agreement speaks in several different sections about “whether John N. Kapoor has been involved, directly or indirectly, in the operation or management of Insys, or in any decision-making relating to the operation of Insys.” If so, it must be reported to the government.
The agreement also requires the company to establish a compliance committee, to be chaired by the compliance officer, and to include members of executive leadership as well as senior leaders from various departments, including legal.
The deal also imposes several obligations on members of the board of directors, which must hire its own independent compliance expert to help it review and assess the compliance program at least quarterly. The expert must have no current or prior relationship with Kapoor “that would cause a reasonable person to question the proposed compliance expert's objectivity.”
The board also must adopt a resolution quarterly summarizing its compliance review, and each board member must sign it. It must include an assessment as to whether Kapoor has been involved with the company in any way.
In addition, the CEO and the chairman of the board must sign certifications that say, “Other than in his capacity as an owner of Insys operating under an independent voting trust agreement, John N. Kapoor did not exert affirmative control of Insys and did not participate in an advisory, management, or decision-making role with Insys, during the reporting period. I understand that this certification is being provided to and relied upon by the United States.”
In a statement Christian Schrank, special agent in charge for the office of inspector general, said “Paying bribes and providing other incentives to prescribe opioids with little regard to patient welfare surely signals a company is more concerned with profits than patients. [The] settlement reaffirms our commitment to ensuring that companies pay a very heavy price for attacking vital government health programs.”
A copy of the deferred prosecution agreement was not yet available Thursday, but a statement of facts outlining the company's misconduct was attached to the criminal plea deal made with a subsidiary, Insys Pharma Inc., as part of the global resolution. The U.S. Department of Justice said several whistleblowers originally brought False Claims Act suits against Insys, and it did not yet know how much they would be awarded.
Both the deferred prosecution agreement with the parent company and the subsidiary's plea deal must still be accepted by U.S. District Judge Rya Zobel in Boston. A hearing has not yet been set.
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