Racketeering for Fentanyl: Opioid Maker Insys Founder Arrested for Bribes
In December of 2016, the Palm Partners Recovery Center blog covered a story about how federal prosecutors were bringing racketeering charges against several employees of Insys Therapeutics Inc. The initial report and the controversy that followed was a profound moment considering criminal charges are rarely ever brought against pharmaceutical companies. Now it seems that even more the corporate drug dealers who helped create the opioid crisis in America are going to be finding themselves under serious scrutiny for their unethical practices.
Last week President Trump declared the opioid epidemic a public health emergency. That very same day, as if to accent the severity of the crisis and the unignorable need for change, the co-founder of Insys Therapeutics Inc. himself was arrested on fraud and racketeering charges.
Insys Therapeutics CEO Taking a Fall
John Kapoor is the former CEO of Insys Therapeutics; a founding father of one of the most prominent opioid manufacturing companies in America. As of last week, Kapoor is reported to be charged with conspiring to push the company’s signature drug for unacceptable uses through a series of bribes and kickbacks.
The drug Kapoor and his company are accused of pushing just happens to be one of the most dangerous opioids on the market, which has contributed to countless deaths across the country over the years- fentanyl.
The brand name for the product made by Insys Therapeutics Inc is Subsys. This extremely potent compound transmits the synthetic opioid fentanyl in spray form. As an opioid analgesic, people use Subsys by spraying it under the tongue for quick absorption of potent fentanyl. Technically, this drug is supposed to only be used for treating cancer patients suffering from severe pain. But according to prosecutors that is very far from the sales strategy Kapoor and his executives were using.
With recent reports showing that approximately 64,000 Americans died last year from drug overdose, and an estimated 20,100 overdose deaths linked to synthetic opioids like fentanyl, how many of those lives were impacted by the drug Insys forced onto the market with bribes?
According to the prosecution, Kapoor and several other former high-ranking executives at the company colluded to bribe doctors to write-
“- large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer.”
They also allegedly-
“- conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients.”
How did they do all this?
The Insidious Work of Insys Therapeutics Inc
Back in 2016, there was the discussion of six former executives and sales-managers from Insys Therapeutics Inc. being arrested. The charges, according to the Justice Department, included:
- Conspiring to defraud health insurers
- Conspiring to bribe doctors into needlessly prescribing Subsys, the company’s fentanyl painkiller
The scam is allegedly a long list of kickback schemes, sham speaking programs, and illegitimate gifts or services.
Sham Speaking
Allegedly, doctors and nurses were paid to attend dinners at high-end restaurants. These dinners were disguised as ‘speaker programs’ that were actually described as gatherings of friends and co-workers who had no power to prescribe medications. Supposed ‘speakers’ were paid fees of up to several thousand dollars for attending these exclusive outings.
One healthcare provider reportedly received an illegal kickback to the tune of $83,000!
All of this money to bribe doctors and other healthcare professionals to prescribe Subsys, even when inappropriate. So not only were they pressuring doctors to use their product over alternatives, but also to prescribe a dangerous and potentially fatal opioid to people who didn’t even need it.
Country-Wide Con-Artists
Other stories written about in Forbes include cases in:
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Connecticut
In 2015 a nurse practitioner pleaded guilty to violating a federal anti-kickback statute by taking money from Insys to prescribe the drug to Medicare patients who did not have cancer.
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Alabama
A former Insys sales representative also pleaded guilty to a conspiracy to violate the anti-kickback statute by paying two doctors to prescribe the drug.
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Illinois
The state has filed multiple claims against Insys Therapeutics involving the pressuring prescriptions of Subsys for unapproved uses.
Doctors who have worked with the company are being investigated by states including:
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New York
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Michigan
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Florida
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Kansas
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New Hampshire
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Rhode Island
U.S. attorneys in the Central District of California and the District of Massachusetts are also investigating Insys Therapeutics Inc.
Shady Gifts and Services
The buck doesn’t stop there either. It wasn’t just cash gifts for unethical practices. Insys Therapeutics wanted their partners in crime to get the full effect of their illicit activities.
The company would send its own employees to work in doctor’s offices when the physician prescribed their fentanyl fuming drug to patients. They even hired the relatives of health care providers as a favor to the family for their loyalty to Subsys.
Insurance Fraud
They allegedly even set up a portion of their staff to defraud insurance companies by calling to speak with insurance representatives while posing as doctors. Some allegations state they were even misrepresenting a patients diagnosis to inflate drug sales.
A December of 2016 indictment states that Insys actively worked to defraud insurance companies by setting up the “reimbursement unit” dedicated to obtaining prior authorization from insurers and pharmacy benefit managers.
Other Insys Therapeutics Exes
Kapoor stepped down as chief executive in January. However, he is definitely not the only former Insys Therapeutics executive currently under fire. This is just the tip of a very rocky ice-berg. The indictment from 2016 included:
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Michael L. Babich
Former CEO and President of the company from Scottsdale, Arizona
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Alec Burlakoff
Former Vice President of Sales from Charlotte, North Carolina
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Richard M. Simon
Former National Director of Sales from Seal Beach, California
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Sunrise Lee
Former Regional Sales Director from Bryant City, Michigan
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Joseph A. Rowan
Former Regional Sales Director from Panama City, Florida
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Michael J. Gurry
Former Vice President of Managed Markets from Scottsdale, Arizona
On January 5, 2017, all of these defendants appeared in federal court for their initial appearance and arraignment. Each has pled not guilty and been released on conditions approved by the court. A Status Conference hearing followed on September 12, 2017 that is the first of many to be held over several months. That day Massachusetts federal judge set a trial date for October 15, 2018, for the 6 executives.
For now, we have to wait and see if any of the dirty laundries from these alleged white-collar criminals come out in the wash.
Holding Big Pharma Accountable
For a long time, Big Pharma companies have been using unlawful and corrupt tactics for marketing and distribution, which many now see has brought with it some great devastation to communities across the nation. Now, during an opioid crisis that has claimed tens of thousands of lives a year, for several years, these discretions are finally catching up to those accused of corporate greed. The DEA, FBI and Justice Department, along with several state officials and district attorneys, are now aggressively pursuing charges against Big Pharma operators who have a connection to some of the most dangerous and widely abused narcotics on the market.
The acting U.S. Attorney William D. Weinreb said in a statement,
“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.
“Today’s arrest and charges reflect our ongoing efforts to attack the opioid crisis from all angles,”
Kapoor was arrested in Arizona and his indictment was filed in federal court in Boston. Prosecutors say the charge of conspiracy to violate the anti-kickback law carries the possibility of up to five years in prison. However, the charges of conspiracy to commit racketeering and conspiracy to commit mail and wire fraud each carry a maximum sentence of up to 20 years in prison. Needless to say, Mr. Kapoor is in for a fight.
But many are still wondering if these executives will truly be held accountable? And truthfully, is it even enough at this point? Even if proven to be indirectly contributing to the opioid epidemic, how could anyone ever know how many lives were damaged or lost because the powerful played around with lethal prescription drugs to line their pockets?
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With recent reports showing that approximately 64,000 Americans died last year from drug overdose, and an estimated 20,100 overdose deaths linked to synthetic opioids like fentanyl, how many of those lives were impacted by drugs like Subsys being forced onto the market with bribes?
