Former Insys Executives Found Guilty of Kickback Schemes to Boost Sales of Powerful Opioid

Opioid executive John Kapoor and four co-defendants are guilty of orchestrating kickback schemes to encourage doctors to boost prescriptions of Subsys, a powerful pain killer.

Kapoor, the founder and former chief executive officer of Insys Therapeutics, along with Richard M. Simon, the former National Director of Sales; Sunrise Lee, a former Regional Sales Director; Joseph A. Rowan, a former Regional Sales Director; and Michael J. Gurry,, the former Vice President of Managed Markets, were convicted by a federal jury of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act, a statute typically used to take on organized crime. Sentencing dates have not yet been set, but each defendant could receive up to 20 years in prison under the RICO statutes and pay a fine of $250,000, or twice the amount of pecuniary gain or loss. The jury deliberated 15 days before a verdict was reached.

With the guilty verdict, Kapoor becomes the highest-ranking pharmaceutical official to be held responsible for the increasing opioid crisis. Prior to the start of Kapoor’s trial, two high-level Insys executives pleaded guilty and testified during the trial: Michael Babich the former CEO and President of the company, and Alec Burlakoff, the former Vice President of Sales.

The Insys executives were found guilty of conspiring to bribe physicians to encourage them to prescribe Insys’ fentanyl-based pain medication, Subsys, to patients often when medically unnecessary, the government said. Subsys is a powerful opioid designed to treat cancer patients suffering from intense pain. The government showed that Kapoor and his sales team used data to identify practitioners who either prescribed unusually high volumes of rapid-onset opioids or had demonstrated a capacity to do so. Once they were identified, the sales team went to work to increase the number of new Subsys prescriptions, and to increase the dosage and number of units of Subsys, the government said. In the trial, the government showed that the Insys team “measured the success of their criminal enterprise by comparing the net revenue earned from targeted practitioners with the total value of bribes and kickbacks paid.” The kickbacks were often noted as “speaker fees.” They then used that information to “reduce or eliminate bribes” paid to prescribers who did not meet the company’s prescribing requirements, which was seen as net revenue equal to at least twice the amount of bribes paid to the practitioner.

In addition to bribing the prescribers, the former Insys executives conspired to defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients, the government said. Federal authorities said the company misled insurers regarding the true diagnosis of a patient in order to get approval for Subsys, which was to be prescribed to cancer patients.

U.S. Attorney Andrew E. Lelling called the conviction a landmark prosecution. Lelling said the conviction of Kapoor and the Insys executives, is the first successful prosecution of top pharmaceutical executives for crimes related to the illegal marketing and prescribing of opioids.

“Just as we would street-level drug dealers, we will hold pharmaceutical executives responsible for fueling the opioid epidemic by recklessly and illegally distributing these drugs, especially while conspiring to commit racketeering along the way. I applaud the prosecutors and investigators who fought this case to the finish and won” Lelling said.

Throughout the trial, which was held in Boston, sordid details of the methods used to persuade the prescribers were brought to light, including having an Insys sales manager perform a lap dance at a Chicago strip club for a doctor the company was trying to woo. Jurors were also introduced to a video from a 2015 sales conference of sales associates dancing with a giant bottle of the addictive fentanyl-based Subsys in a rap music video.