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 executivesin 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.
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.
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.