CEO Of Insys Therapeutics Arrested and Charged with Racketeering And Bribery Of Doctors Selling Dangerous Opiate

By Aaron Kesel

John Kapoor, 74, board chairman of Akorn Pharmaceuticals and CEO of Insys Therapeutics Inc. and several others have been indicted and charged with leading a nationwide conspiracy to bribe doctors to prescribe his company’s opioid painkiller Subsys, The Chicago Tribune reported.

Kapoor is being charged with RICO conspiracy, as well as other felonies, including conspiracy to commit mail and wire fraud and conspiracy to violate the Anti-Kickback Law in a larger conspiracy.

Last December, six other Insys executives were indicted on federal charges in Boston in connection with the alleged scheme.

Others indicted according to a DOJ press release include six former executives of Insys Therapeutics – Michael L. Babich, 40, of Scottsdale, Ariz., former CEO and President of the company; Alec Burlakoff, 42, of Charlotte, N.C., former Vice President of Sales; Richard M. Simon, 46, of Seal Beach, Calif., former National Director of Sales; former Regional Sales Directors Sunrise Lee, 36, of Bryant City, Mich., and Joseph A. Rowan, 43, of Panama City, Fla.; and former Vice President of Managed Markets, Michael J. Gurry, 53, of Scottsdale, Ariz. The release says they all “conspired to bribe practitioners in various states, many of whom operated pain clinics, in order to get them to prescribe a fentanyl-based pain medication.”

Additionally, prosecutors say that they all conspired to mislead and defraud health insurers that were reluctant to approve payments for the drug when it was prescribed for non-cancer patients who it wasn’t authorized to be sold to.

Fentanyl is 80 times more potent than morphine. Subsys was formulated as a sublingual spray so the drug would move rapidly into the bloodstream. The Food and Drug Administration okayed the drug use for severe cancer patients, but prosecutors say Insys marketed Subsys to patients who didn’t have cancer, lying to insurance companies and paying off doctors with exorbitant payouts.

Kapoor claims he is innocent and will be vindicated after the trial. “I am confident that I have committed no crimes and believe I will be fully vindicated after trial,” he said in a letter to shareholders, adding that, throughout his long career, he had focused on “innovation, creating jobs, and advancing patient care.”

Kapoor further told Forbes magazine last year that his involvement is solely as an investor in the drug and nothing more.

As an investor, I’m on a board. As a board member and an investor you are involved, but you are not involved in day-to-day operations, and that’s where the problems come in.

But prosecutors disagree that he is innocent, citing two times that the investor was involved with lucrative activities within the company.

On September 17, 2012, prosecutors say, Kapoor was blind-copied on an email from Burlakoff encouraging sales reps to take “a calculated risk” by paying doctors who prescribe a lot of fentanyl products speaking fees; the allegation is that the doctors then write prescriptions worth even more than they were paid. That December, prosecutors say, Babich, Burlakoff, and other executives created a presentation for Kapoor showing the “return-on-investment” for speaker fees by doctors. If Insys didn’t so much as double its investment, the doctor was marked as not being worthy of paying.

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In another instance, two top fentanyl prescribers owned a pharmacy at which patients got the drug. Prosecutors allege that Insys executives were worried that other pharmaceutical makers of fast-acting fentanyl products were getting the prescribers’ business instead of Insys. That’s when Kapoor and Babich traveled to Mobile, Alabama, and visited with the prescribers and the pharmacists, producing a deal where Subsys would be sold directly to the pharmacy, skipping a drug wholesaler and saving the pharmacy 7%. Prosecutors further alleged that this allowed Insys and the prescribers to avoid the federal Drug Enforcement Agency (DEA), because the system didn’t work to stop the suspicious order for opioids since its the wholesalers who stop an order and alert the DEA not drug companies.

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Medical practitioners wrote large numbers of prescriptions for patients who did not have cancer and employees of Insys were encouraged to mislead insurance companies, according to whistleblower Patty Nixon who used to work for the company.

“The question they would ask is, ‘Does the patient have breakthrough cancer pain?’ And we would say, ‘Yes, we’re treating the breakthrough pain,’” she said.

One victim of the drug, MacKenzie Colby, described to ABC how addictive the drug was and the horrors she faced attempting to get off of it.

“I got to the point where I wasn’t taking it for pain anymore. I was taking it so I wouldn’t be sick anymore,” she said.

“We were just numbers to them,” Colby said. “With a dollar sign in front.”

“While understandable, it’s disingenuous to repeatedly demonize a company that has made a firm and sincere commitment and is taking all the necessary steps to conduct business according to high ethical standards,” an Insys press release said.

“We have taken necessary and appropriate steps to prevent past mistakes from happening in the future, and are committed to conducting business according to high ethical standards and the interests of patients,” the company said. “We also continue to work with relevant authorities to resolve issues related to the misdeeds of former employees.”

Federal prosecutors in Boston brought the case as part of “ongoing efforts to attack the opioid crisis from all angles,” said Boston-based Acting U.S. Attorney William D. Weinreb.

“In the midst of a nationwide opioid epidemic that has reached crisis proportions, Mr. Kapoor and his company stand accused of bribing doctors to overprescribe a potent opioid and committing fraud on insurance companies solely for profit,” Acting United States Attorney William D. Weinreb said. “Today’s arrest and charges reflect our ongoing efforts to attack the opioid crisis from all angles. We must hold the industry and its leadership accountable – just as we would the cartels or a street-level drug dealer.”

A judge set bail at $1 million for Kapoor. This comes as U.S. President Donald Trump has vowed to tackle the opioid crisis plaguing the United States, calling it an epidemic “public health emergency.”

In 2015, 33,091 people died from opioid overdose, while 12.5 million people misused prescription opioids, according to the most recent statistics available from the Department of Health and Human Services.  Drug deaths involving fentanyl increased nearly 600 percent from 2014 to 2016, The Washington Post reported. There were 582 fatal overdoses linked to the synthetic drug in 2014. Last year, the number jumped to 3,946.

Aaron Kesel writes for Activist Post and is Director of Content for Coinivore. Follow Aaron at Twitter and Steemit.

This article is Creative Commons and can be republished in full with attribution. Like Activist Post on Facebook, subscribe on YouTube, follow on Twitter and at Steemit.

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11 Comments on "CEO Of Insys Therapeutics Arrested and Charged with Racketeering And Bribery Of Doctors Selling Dangerous Opiate"

  1. I worked for the Pharm industry about 30 years ago in both pre-clinical and clinical trials as a contractor. Although I was offered permanent jobs in both areas, I remained a contractor so even though I had signed confidentialy agreements had I seen bad conduct, I could report it without risking my pension and other benefits. Even there I saw some irregulatities in clinical. If a clinical investigator reported too many possible adverse side effects his or her data would disappear from the final analysis. At that time the indusru was bitching about the time tat was taken by the FDA to make a final decision on whether to approve a new drug for market Which was happening because Congress would not fund the possisions necessary to make the approval process faster. The industry wnet to Congress and aked for persmission to make direct ‘contributions ‘ to the FDA for the hiring of the necessary personnel, and Congress bit on this because that allowed them to cut the Federal FDA budget and ‘save the taxpayers money’ while increasing the work force to keep up with New Drug applications – the privatization of the FDA or letting the fox into the hen house. Corruption. At the time that application was made for Phase III clinical trials – making prescriptions for drugs to be taken out side of the hospital setting where the drug would be self administered, one of the most important factors that the FDA then considered was ‘abuse potential’. In a hospital setting the patient has no control over either the dose or the timing between doses, so he or she has little risk of becoming addicted, but away from the hospital or the clinic, such as the methadone clinics where people who have been junkies are sentenced to get all of their pain meds, to replace their more distructive heroin or other opoid addiction. A nurse friend works at one of these methadone clinics and told me that he has to conduct random drug tests on his patients to try to insure that they are not taking any other illegal drugs, and when this is found they are arrested and made to serve time in the local jail and receive their doses there. This works.
    Then there is the way that the the pharm compaines sell their durgs. The pharm reps are nothing but sale men and women who have no involvement in the research process and probably do not have the educations required to even understand it. They just go from private practice to private practice with their boxes of samples to tell the doctors about the advantages of their product over competitor product, where the possible adverse consequences are not on the script, and so they are the primary sources of physican information about the drugs. It is no accident that many or most of these pharm reps are very attractive young women. The doctor’s greistry numer is taken and reported back to the drug company every time a prescription is written or refilled, and based on the number of doeses the doctor may or may not be invited to a conference – an all expense paid vacation which is a write off for the company on their taxes.
    If the abuse potential was still being an important factor, none of these drugs whould have ever been prescribed, except in very limited quantities for outside of hospital or clinic use, but money buys deregulation.
    As soon as a drug is discovered by a computer doing molecular modeling – similar to another chemical that has found use and approval, the formula for the drug becaomes public knowledged from the patent office. Then once it has approved for human use in Phase I clinical trials, the ones with the formuals can start making the drugs and begin selling them on the underground market without any regard for adverse consequences at all, so all money that they get from sales is pure profit, and that creates a problem of a different order and magnitude. Our curent pill problem could have been avoided with proper action years ago by just contolling the supply and the where of what they would have been used, but Capitalism gets in the way, and so we have people dying from overdoses of meds that should never have been patented in the first place.
    The now dead jukies will not care if these criminals go to prison or not.

  2. All I can say is Holy Shit? Opioids, kill more than automobiles or guns. One brand, marketed dishonesly, killed more than 3000 in a year. Those responsible should spend he rest of their lives in prison, forced to work in the hospital to treat drug overdoses.

    Trump says he wants to end the opioid crisis but here is another Holy Shit!
    ” President Trump’s administration revealed plans to gut the 2018 budget of his Office of National Drug Control Policy. According to an Office of Management and Budget document obtained by The New York Times, the White House is proposing to slash the drug policy office budget by about 95 percent, to just $24 million from $388 million.”

    Let me add, WTF!?! Trump should spend the rest of HIs life in prison as well for criminal hypocrisy which will lead to even more drug deaths.

    • So, the fact that Trump will defund a failed, likely corrupt operation in the federal government means that he is trying to promote the opioid attack on Americans? You might want to pay attention to the results of what he does instead of whether he allows money to flow to departments with the right words in their name.

      Federal drug policy in this country is one of its biggest failures, and your last asinine statement tells me that you are either unhinged or part of the problem.

      • Derek – You said: “Trump will defund a failed, likely corrupt operation in the federal government…” If that’s Trump’s game plan… are you anticipating that he will “defund” the presidency?

        Like you said: “You might want to pay attention to the results
        of what [Trump] does”. So tell me… what do you see so far… that has or will in the foreseeable future… make your life better?

        So far… you appear to be hardly the one to tell someone else to PAY ATTENTION. I could be wrong. After all… I hardly know you.

      • What evidence do you have of corruption? And the way to fix a broken agency is not to defund it but to fix it. Trump now has his own man in charge, so how about finding out if it failed and correcting it? Defunding drug control means he is a hypocrite, since you can’t tackle a problem by defunding the agency needed to address it. What should I pay attention to: he has only made speeches and done nothing.

        Your personal insults and lack of evidence are a red flag you are a blind follower of a corrupt and inept ruler.

      • Trump did not say the agency had failed or was corrupt but rather that cutting its funding by 94% would “streamline it.” That is Orwellian bullshit. Here is an example of some of the alleged corruption you assume:
        “A federal drug control agency that the Trump administration may essentially defund played a big role in bringing together some 150 clinicians in Newton, New Jersey, last month to learn more about prescribing much abused opioid painkillers.
        … attendees of a Do No Harm symposium listened to experts discuss nonopioid therapies for managing pain. They reviewed a new state law that limits an initial dose of opioid painkillers to 5 days. And they learned how addiction to prescription opioids can morph into a heroin habit.
        The Do No Harm symposium, like the 20 or so that have proceeded …was funded in part by the Office of National Drug Control Policy (ONDCP), created by the Anti-Drug Abuse Act in 1988 during the Reagan administration. Angelo Valente, executive director of the Partnership for a Drug-Free New Jersey, a cosponsor of the symposia series, said federal support has played an important role in making this educational experience possible. More than 3500 clinicians have attended it since 2014.

        Such worries have multiplied in Valente’s field of drug-abuse prevention since the surfacing last week of a White House budget document that proposed cutting ONDCP’s line from $380 million in fiscal 2017 to $24 million in fiscal 2018, a 94% decrease. The reason? “To reflect a smaller, more streamlined organization that can more effectively address drug control issues,” states the budget document, first obtained by Politico.”

        So cutting out educational programs would end corruption and failure?

        Medscape goes on to show what would be cut
        : “Most of the savings would come from eliminating two ONDCP programs that make up the lion’s share of the office’s work. The first, the High Intensity Drug Trafficking Areas (HIDTA) program, budgeted for $250 million in 2017, assists law enforcement agencies, federal to municipal, in curbing the manufacture and sale of illegal drugs. An HIDTA for New Jersey and New York together with Valente’s organization and the Drug Enforcement Administration created the Do No Harm symposia series.
        The other program slated for extinction is Drug-Free Communities (DFC) Support Program. DFC funds local coalitions of schools, businesses, parents, young people, religious organizations, law enforcement agencies, and other community groups that attempt to prevent youth substance abuse. In 2017, the DFC program was allocated $95 million.”

        The budget cuts are justified, according to the White House because other health agencies are doing he work, but Trump is also cutting those agencies!

        “The Trump administration’s proposed 2018 budget cuts billions from public health and biomedical research programs.

        The budget, which was released Tuesday, takes drastic spending cuts to agencies within the Department of Health and Human Services.
        Here are some of the biggest cuts the agencies within the HHS are facing:

        Centers for Disease Control and Prevention – 17%
        The CDC, which is in charge of public health and disease prevention, would see its budget cut by $1.2 billion. Dr. Tom Frieden, who was director of the agency until 2017, went off on the proposed cuts on Twitter on Monday, saying Americans would be “less safe,” and that the cuts “would increase illness, death, risks to Americans, and health care costs.”

        Admin: cut CDC $1.2B (17%). More cancer, HIV, sr falls, infx
        Proposed CDC budget: unsafe at any level of enactment. Would increase illness, death, risks to Americans, and health care costs.
        Dr. Tom Frieden @DrFrieden

        Food and Drug Administration – 31%
        The FDA, which is responsible for regulating food and drugs, along with medical devices, blood donations, veterinary products, and cosmetics, is getting its direct budget slashed, though its making up for it with user fees.

        Medicaid – $610 billion over the next decade
        Medicaid, the national and state program that covers low-income people, could see its budget cut by $610 billion over the next 10 years under the proposed budget.

        Andy Slavitt, the former head of Medicare and Medicaid under the Obama administration, called the move an “assault on poor & disabled” in a tweet.

        National Institutes of Health – 18% cut
        The proposed budget outlines an 18%(or about $5.8 billion) cut to the NIH, which funds biomedical research, including cancer research. A number of organizations came out against the cuts

        A group of medical schools, patient organizations, and doctors spoke out against the cut, instead asking Congress to increase the NIH’s budget by $2 billion in a full-page ad in Politico and the Wall Street Journal on Tuesday.”

        This is an assault on all the health agencies, using spending cuts to fund tax cuts for the rich.

  3. Big Pharma use corruption and covert forms of bribery and faked research to sell most of their products – especially vaccination which maims billions – they should all deserve this . This guy wasn’t big enough
    so the big boys went for him and will divi up his trade.

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