Pharma Billionaire Arrested on Charges of Fraud to Prescribe Opioid Painkiller

Insys founder John N. Kapoor is accused of using bribery and fraud for prescription of fentanyl spray called Subsys to patients who did not need it.


John N. Kapoor, the billionaire majority owner and founder of Insys Therapeutics Inc., was arrested on Oct. 26 in Phoenix. Kapoor faces charges of using bribery and fraud to promote prescription of an opioid pain medication to patients.

Kapoor, 74, who had stepped down as the CEO of the pharmaceutical company in January this year, was charged with RICO conspiracy, conspiracy to commit mail and wire fraud, and conspiracy to violate the anti-kickback law. Six other former executives of the firm were charged and arrested in the same case in December last year.

Kapoor’s attorney said his client “is innocent of these charges and intends to fight the charges vigorously,” CBS News reported.

“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,” William D. Weinreb, acting U.S. attorney, said in a statement. “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.”

Subsys Painkiller

Insys is accused of bribing several doctors to push the fentanyl spray called Subsys, and market it to patients who did not need it. Subsys was meant to use spray technology to administer fentanyl, a narcotic said to be 80 times more potent than morphine, under the tongues of cancer patients to ease the intense pain they suffer from. Kapoor lost his wife Editha to metastatic breast cancer in 2005.

However, the company was accused of achieving huge sales by getting Subsys prescribed to patients who did not have cancer. Last month Deborah Fuller, who has been leading the accusations against Insys, after her daughter Sarah died in March 2016 following usage of the medicine, told a Senate roundtable in Washington: “The only thing that keeps us going at this point in our lives is that the people who did this to my baby will be held accountable for their actions.” She added: “Losing a child is agonizing, but then learning that [daughter] Sarah died from a drug that she should never have been prescribed has caused us so much more anguish and outrage,” according to ABC News.

Checkered Past

Kapoor, who is estimated to have a net worth of $1.8 billion, remained on the Board of Directors after stepping down from the CEO’s post. Born in Amritsar, India, Kapoor earned an undergraduate degree in pharmacy from Bombay University, followed by a doctorate in medicinal chemistry from the State University of New York at Buffalo in 1972. During his four-decade career in the pharmaceutical industry in the United States, Kapoor has been at the center of several controversies, including a $100 million lawsuit filed against him in 1990 by Japanese drug major Fujisawa Pharmaceutical. Kapoor made a settlement for an undisclosed amount in 1999.

The accusations of racketeering against Insys started in 2015, when Heather Alfonso, a nurse practitioner in Connecticut, pleaded guilty to charges of federal anti-kickback laws. She was accused of receiving speaking payments worth $83,000. Prosecutors alleged she prescribed $1.6 million worth of Subsys, mostly of patients who did not have cancer. The same year, Insys paid doctors $6.3 million for activities including giving talks, according to data collected by the Centers for Medicare & Medicaid Services, Forbes reported. Four other doctors were given fees of over $100,000, while 11 more were shown to receive about $75,000.

In December 2016, six Insys executives were arrested and charged: Former CEO Michael Babich; Alec Burlakoff, the former vice president of sales; Richard M. Simon, the former national director of sales; former regional sales directors Sunrise Lee and Joseph A. Rowan; and former vice president of managed markets, Michael J. Gurry.

“As alleged, these executives created a corporate culture at Insys that utilized deception and bribery as an acceptable business practice, deceiving patients, and conspiring with doctors and insurers,” Harold H. Shaw, the special agent in charge of the Federal Bureau of Investigation, Boston Field Division, said in a statement. “The allegations of selling a highly addictive opioid cancer pain drug to patients who did not have cancer, make them no better than street-level drug dealers. Today’s charges mark an important step in holding pharmaceutical executives responsible for their part in the opioid crisis. The FBI will vigorously investigate corrupt organizations with business practices that promote fraud with a total disregard for patient safety.”

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