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 By Nate Raymond
BOSTON (Reuters) - The billionaire founder of Insys Therapeutics Inc
was arrested on Thursday on U.S. charges he participated in a scheme
to bribe doctors to prescribe a fentanyl-based cancer pain drug,
marking a step by authorities to fight the opioid epidemic.
John Kapoor, Insys' majority shareholder who stepped down as chief
executive in January, was charged with engaging in conspiracies to
commit racketeering, mail fraud and wire fraud in an indictment
filed in federal court in Boston.
He was added as a defendant in a case against six former Insys
executives and managers, including former Chief Executive Michael
Babich. Following a court hearing in Phoenix, Kapoor, 74, was
released on a $1 million bond.
Brian Kelly, Kapoor's lawyer, in a statement said: "My client is
innocent and he intends to fight these charges vigorously."
Arizona-based Insys, which has been in settlement talks with the
U.S. Justice Department, declined to comment. Its stock price fell
22.64 percent to close at $5.74 on Thursday.
The charges marked a major escalation of investigations related to
Subsys, an under-the-tongue spray that contains fentanyl, an
addictive synthetic opioid. They came as U.S. President Donald Trump
on Thursday declared the opioid crisis a public health emergency.
Acting U.S. Attorney William Weinreb said the charges reflected
authorities' commitment to combat the opioid abuse epidemic.
According to the U.S. Centers for Disease Control and Prevention,
opioids were involved in over 33,000 deaths in 2015.
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"We must hold the industry and its leadership accountable - just as
we would the cartels or a street-level drug dealer," Weinreb said in
a statement.
Kapoor, who founded Insys in 2002 and remains a board member,
stepped down in January as Insys' chairman and chief executive, a
role he took on in November 2015.
He is currently the chairman of drugmaker Akorn Inc, which Fresenius
SE & Co KGaA has agreed to buy, and president of investment firm EJ
Financial Enterprises Inc.
Prosecutors said beginning in 2012, Kapoor, Babich and others
devised a scheme to pay speaker fees and other bribes to medical
practitioners to prescribe Subsys.
They also sought to defraud insurers into approving payment for
Subsys when it was prescribed to patients who did not have cancer,
the indictment said.
The other defendants include former Insys Vice Presidents Alec
Burlakoff and Michael Gurry; ex-national sales director Richard
Simon; and former regional sales directors Sunrise Lee and Joseph
Rowan. They have pleaded not guilty.
(Reporting by Nate Raymond in Boston; Editing by Andrew Hay and Lisa
Shumaker)
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