Opioid Executive & Founder of Insys Therapeutics Guilty of Racketeering Conspiracy

Canary. Photo by 4028mdk09.

In case you missed it, as part of the running series on the opioid crisis and legal cases, the Morning Canary posted in February: Trial Evidence: Opioid Maker Used Rap Video to Push Fentanyl.

In yet another trial against another opioid maker, this one being held in Massachusetts, in which the Arizona based Insys Therapeutics Inc. and its “wealthy founder and former chairman” John Kapoor is “the highest-ranking pharmaceutical company figure to face trial,” according to a January Associated Press report.

The 75 year old Kapoor, along with four other Insys employees, were arrested in 2017 and charged with racketeering conspiracy. Prosecutors allege that the company’s executives, not “satisfied with sales” devised a plan to “offer cash to doctors in exchange for prescriptions” for a fentanyl spray called Subsys, “a drug meant for cancer patients with severe pain.”

“Soon, the highly addictive fentanyl spray was flourishing, and executives were raking in millions.”


NPR reported that after the jury deliberated for 15 days, Insys Therapeutics’ founder John Kapoor and his four co-defendants were all found guilty of racketeering conspiracy.

The federal government accused Kapoor, the founder of Insys Therapeutics, and his co-defendants of running a nationwide bribery scheme. Between 2012 and 2015, Insys allegedly paid doctors to prescribe its potent opioid medication and then lied to insurance companies to ensure that the expensive fentanyl-based painkiller would be covered.

As the trial got underway in January, Kapoor continued to maintain his innocence saying he had committed no crimes and he would be vindicated at trial.

Former federal prosecutor Brad Bailey, now a criminal defense attorney and has been following the case, said it was unusual for the government to use criminal charges to go after corporate executives using racketeering charges which were designed to go after the Mafia.

“By charging Kapoor and his co-defendants with racketeering, Bailey said, the federal government was essentially saying that the practices at Insys Therapeutics resembled organized crime.”

Bribes and lies, or an unknowing executive?

Calling 39 witnesses, federal prosecutors argued that Kapoor was motivated by money and willing to put patients’ lives at stake to improve his bottom line. They depicted Insys Therapeutics as a struggling company under intense pressure from Kapoor to succeed.

Prosecutors outlined a two-step approach that Insys followed to boost sales of its opioid painkiller, Subsys: first, bribe doctors and, then, lie to insurance companies.

Insys allegedly targeted doctors with a track record of liberally prescribing opioids, inviting them to participate in a “speakers program.” According to the government, doctors were paid handsomely even if nobody showed up for the lectures, but only if the doctors wrote a lot of prescriptions for Subsys. Often, prosecutors say, this meant patients who didn’t need the medication were prescribed it anyway.

Insys then allegedly set up a call center where drug company employees pretended to be from doctor’s offices. Jurors heard phone calls in which Insys employees made up diagnoses to ensure that insurance companies covered Subsys, which can cost tens of thousands of dollars a month.

Kapoor’s defense only called a handful of witnesses, one a patient vouching for Subsys, saying that it helped him to reduce his pain significantly after a car accident.

However, the main argument of Kapoor’s defense was that he was “unaware of the illegal schemes,” blaming “several former employees, in particularly Insys former vice president of sales Alec Burlakoff.

“Burlakoff and several other former Insys executives pleaded guilty and testified for the prosecution in the hopes of getting a more lenient sentence. The defense emphasized Burlakoff’s history of lying and his hatred of Kapoor, which was captured on tape by federal investigators.”

While Kapoor has been on trial in Boston’s federal courthouse, the company he founded has been facing financial troubles and management turmoil. Arizona-based Insys Therapeutics said in a statement that “there is substantial risk surrounding our ability to continue … primarily due to mounting legal costs and uncertain legal settlement exposures.”

Last year, the pharmaceutical company agreed to pay at least $150 million to end a Justice Department investigation into the bribery and kickback scheme. The insurance company Aetna, as well as patients, shareholders and state attorneys general, have also sued Insys.

On April 15, Insys replaced its CEO, Saeed Motahari, with the company’s chief financial officer, Andrew Long. Since their high point in 2015, Insys shares have tumbled. Bloomberg News reported that shares had fallen 90 percent.

“Bailey, the former federal prosecutor, says other pharmaceutical companies may see Insys’ woes as a cautionary tale. However, some worry that the trial didn’t strike at the root of the opioid crisis.”

Leo Beletsky, a professor of law and health sciences at Northeastern University, says, “A lot of what pharmaceutical companies did in the context of the opioid crisis that we are dealing with now was not, in fact, illegal. It was maybe unethical, but it was not illegal.”

While bribing doctors to write prescriptions and fabricating diagnoses is illegal, paying physicians to promote products to their peers is a common practice in the pharmaceutical industry. Off-label prescribing is also legal and common, although sales representatives are not technically supposed to advocate for off-label uses of a medication.

Beletsky says by focusing on individuals and their illegal schemes, this trial overlooked broader issues, such as drug companies legally spending billions of dollars to maximize the use of their medications.

For now there are no efforts being made to regulate the pharmaceutical industry. Unless, or until then, the only strategy to push back against these marketing practices will continue to remain in the courts.

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US Representative Tom Marino, who represents Pennsylvania’s 12th Congressional District and was one of Trump’s earlier supporters, co-chairing Trump’s presidential election campaign in Pennsylvania with Rep. Lou Barletta (R-PA), announced in a statement released to the press on Thursday, the Associated Press reported, that, “his last day will be Jan. 23 and that he is taking a job in the private sector,” only days into the new US Congressional session after winning an easy reelection for his “heavily Republican district in northern Pennsylvania.”


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