Insys founder, former executives face opioid kickback scheme trial

[January 28, 2019]  By Nate Raymond

BOSTON (Reuters) - The one-time billionaire founder of Insys Therapeutics Inc and four other former executives and managers of the opioid drugmaker will face trial over charges they conspired to pay doctors bribes to prescribe patients an addictive fentanyl spray to boost sales.

Lawyers are set to deliver opening statements Monday in federal court in Boston in the case of former Insys chairman John Kapoor, the highest-level executive of a painkiller manufacturer to be tried amid a deadly U.S. opioid abuse epidemic.

Prosecutors say Kapoor directed a kickback scheme that helped fuel the epidemic in order to boost the company's sales of Subsys, an under-the-tongue fentanyl spray approved only for use in managing severe pain in cancer patients.

Fentanyl is an opioid 100 times stronger than morphine.

Net revenues for Subsys grew from $8.6 million in 2012 to $329 million in 2015, according to Insys.

Kapoor, 75, who also served as the Chandler, Arizona-based company's chief executive from 2015 to 2017, denies wrongdoing.

Beth Wilkinson, Kapoor's lawyer, has argued that prosecutors are trying to make "unattractive" but normal drug marketing practices appear illegal by wrongly trying to link Kapoor to the drug epidemic.

Kapoor's 2017 arrest came the same day U.S. President Donald Trump declared the opioid crisis a public health emergency. In 2017, a record 47,600 people died of opioid-related overdoses, the U.S. Centers for Disease Control and Prevention says.

Two top former executives - Michael Babich, Insys' CEO from 2011 to 2015, and Alec Burlakoff, its ex-vice president of sales - have become government witnesses after pleading guilty to carrying out the scheme at Kapoor's direction.

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

Kapoor's co-defendants include former Insys executives and managers Michael Gurry, Richard Simon, Sunrise Lee and Joseph Rowan. They have pleaded not guilty to racketeering conspiracy.

Prosecutors allege that from 2012 to 2015, Kapoor and his-co-defendants conspired to pay doctors bribes in exchange for prescribing Subsys and to defraud insurers into paying for it.

Prosecutors said Insys paid doctors as much as $200,000 to participate in speaker programs ostensibly meant to educate medical professionals about Subsys but that were actually poorly attended sham events.

The scheme led doctors to write medically unnecessary prescriptions for Subsys to patients, many of whom did not have cancer, prosecutors said.

Insys in August said it would pay at least $150 million to resolve a Justice Department probe related to its marketing of Subsys, and that it has taken steps to ensure it operates legally going forward.

(Reporting by Nate Raymond in Boston; Editing by Alexia Garamfalvi and Leslie Adler)

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