First major pharmaceutical executive convicted on criminal charges related to opioid crises

Insys founder found guilty of racketeering in connection with bribes to prescribe potent opioid spray.

On past Monitor Monday programs, we have reported on John Kapoor, the former CEO of opioid giant Insys Therapeutics Inc., who has been under indictment since October 2018 for alleged violations of the Anti-Kickback Statute (AKS), which prohibits medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment paid for by government healthcare programs like Medicare and Medicaid.

The law, often referred to as AKS, is designed to keep medical treatment decisions free from the influence of potential monetary gain. Violations of AKS can also be violations of the False Claims Act, which allows private citizen whistleblowers to report on fraud against the government and share in the recovered amount.

Kapoor was charged with paying hundreds of thousands of dollars to doctors in exchange for their prescribing a spray called Subsys that contained fentanyl, a powerful opioid; Subsys is 100 times stronger than morphine and can cost tens of thousands of dollars a month. The scheme was brought to light by seven whistleblowers, most of whom were former employees of Insys. In August 2018, the government settled its civil case against Insys for $150 million, with the individual whistleblowers receiving a share of the recovery.

The parallel criminal case, in which Kapoor was charged with racketeering, a charge generally reserved for organized crime bosses, continued. Kapoor pleaded not guilty to all charges in November 2018.

The criminal case went to trial, and on May 2, after 15 days of deliberations, the jury found Kapoor and four co-conspirators guilty of racketeering. The jury found that Insys paid doctors to prescribe Subsys and then lied to insurance companies to ensure that their actions were concealed. Although the sentencing hearing has not yet been scheduled, Kapoor, who is 76 years old, faces up to 20 years in prison. 

John Kapoor is the first major pharmaceutical executive to be convicted on criminal charges that relate to America’s opioid crises and overdose deaths. Other companies and their executives have been accused of similar practices.

In the trial, which lasted 10 weeks, the government portrayed Kapoor as caring about profits over the well-being of patients. According to the prosecution’s case, Insys allegedly sought doctors who already were above-average prescribers of opioids and invited them to participate in the company’s “speakers’ program.” As long as they continued to prescribe Subsys, doctors were paid high sums for their speeches, even if nobody showed up, federal prosecutors argued.

Insys also allegedly created a call center where its employees pretended to be employed by the doctors in the speakers’ program. Those employees allegedly then fabricated diagnoses to ensure that insurance carriers would cover the costs of the opioid drug.

At trial, Kapoor’s attorneys argued that he was uninvolved in and unaware of the illegal schemes, blaming several other former Insys executives, some of whom had already pleaded guilty in connection with related criminal actions. The jury seemingly rejected this argument.

The scandals have put Insys in dire financial straits, with the company announcing that “there is substantial risk surrounding our ability to continue … primarily due to mounting legal costs and uncertain legal settlement exposures.” The company’s stock has fallen 90 percent, compared to its 2015 all-time-high.

Several other former Insys executives, as well as former executives of other companies, are facing their own legal challenges. We here at RACmonitor will continue to keep you informed as to the various cases progress, in what has been described as a year of reckoning for executives of the pharmaceutical companies who have made and continue to make billions from opioids.

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