Billionaire founder of Insys to plead not guilty to opioid bribe scheme

[November 16, 2017]  By Nate Raymond

BOSTON (Reuters) - The billionaire founder of Insys Therapeutics Inc was expected to appear in federal court in Boston on Thursday to plead not guilty to charges that he participated in a scheme to bribe doctors to prescribe a fentanyl-based cancer pain drug.

John Kapoor, who stepped down as Insys' chief executive officer and chairman in January but remains the majority shareholder, was charged last month with engaging in conspiracies to commit racketeering, mail fraud and wire fraud.

Brian Kelly, a lawyer for Kapoor, said on Monday that his client would plead not guilty. In court papers filed ahead of the hearing, lawyers for Kapoor, 74, called the allegations against the billionaire "thin, vague and conclusory."

Kapoor's arrest in Phoenix on Oct. 26 came as U.S. authorities have been fighting a national opioid addiction epidemic that the U.S. Centers for Disease Control and Prevention linked to more than 33,000 deaths in 2015, the latest year for which statistics are available.

The charges marked a major escalation of probes centered on Chandler, Arizona-based Insys' flagship product Subsys, an under-the-tongue spray that contains fentanyl, an addictive synthetic opioid.

Following Kapoor's arrest, Insys on Oct. 29 announced he had resigned from its board and it had recorded $150 million as its best estimate for the minimum amount it would have to pay to settle the U.S. Department of Justice probe.

The billionaire founder of Insys Therapeutics Inc. John Kapoor, exits the federal court house after a bail hearing in Phoenix, Arizona , U.S., October 27, 2017. REUTERS/Conor Ralph/File Photo

Kapoor, who founded Insys in 2002, was charged in an indictment that added him as a defendant in a case against six former Insys executives and managers, including ex-CEO Michael Babich, who were initially charged in December 2016.

The indictment said that, beginning in 2012, Kapoor, Babich and others devised a scheme to pay speaker fees and other bribes to medical practitioners to prescribe Subsys and to defraud insurers into approving payment for it.

Federal charges have also been filed in several other states against other ex-Insys employees and medical practitioners who prescribed Subsys.

Insys also faces lawsuits by attorneys general in Arizona and New Jersey. It previously paid $9.45 million to resolve investigations by attorneys general in Oregon, New Hampshire, Illinois and Massachusetts.

(Reporting by Nate Raymond in Boston; Editing by David Gregorio)

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