Opioid Kickback Schemes Taken to Task By Federal Officials
The founder and former top employees of a pharmaceutical company are facing a reckoning for their role in a bribery scheme that prosecutors say boosted sales of a powerful, highly addictive painkiller and helped fuel the national opioid epidemic.
Starting Monday, seven people who worked for Insys Therapeutics will appear in Boston to be sentenced by a federal judge.
The case against company founder John Kapoor and his associates was considered the first that sought to hold an opioid maker and its executives criminally liable for the drug crisis that's claimed nearly 400,000 lives over two decades.
At least two other companies, a drug distributor in New York and another in Ohio, have since been hit with criminal charges. But prominent industry names - specifically OxyContin maker Purdue Pharma and the Sackler family that owns it - have only faced lawsuits, which carry no threat of prison time.
Prosecutors say officials at Arizona-based Insys Therapeutics paid millions of dollars in bribes to doctors across the country so they would overprescribe Subsys, a fentanyl-based oral spray meant to ease intense pain suffered by cancer patients.
Insys Therapeutics also deployed other questionable marketing tactics, according to prosecutors. One sales executive, who prosecutors said used to be an exotic dancer, gave a physician a lap dance at a club. And the company misled insurers to get payment for the drug, which cost as much as $19,000 a month.
Following a lengthy trial, Kapoor and four others were convicted last year of racketeering conspiracy. Two other defendants pleaded guilty.
Shortly after, the company reached a $225 million settlement with the U.S. Department of Justice to end its criminal and civil probes.
Insys Therapeutics has since filed for bankruptcy protection, and it's not clear whether the company will fully pay what's owed. The company has been approved to sell off Subsys and its other drugs for about $30 million, but the it maintains its assets, all told, are worth only $175 million.
U.S. Attorney for Massachusetts Andrew Lelling, whose office is prosecuting the case, said Insys Therapeutics has already paid $5 million towards the $195 million civil settlement with the government. A $2 million criminal fine and $28 million forfeiture haven't been paid.
While the defendants can face up to 20 years for the charges, prosecutors are seeking 15 years for Kapoor, arguing the former billionaire was the “fulcrum” of the scheme, according to recent court filings.
Kapoor's lawyers counter their client was portrayed as a “caricature” of a mob boss but is really the “consummate immigrant success story.”
They say in their filings that the India-born exec developed Subsys after seeing his wife suffer and die from breast cancer. They're seeking no more than a year and a day in prison for Kapoor.
For the other defendants, Lelling's office is seeking sentences ranging from five to 11 years.
Michael Gurry, an Arizona resident who was a company vice president, will be the first sentenced on Jan. 13.
Richard Simon, a California resident who had been the company's head of sales, will follow on Jan. 21, along with Joseph Rowan, of Florida, who was a regional sales director.
Sunrise Lee, a Michigan resident and the former regional sales director, will be sentenced on Jan. 22 along with Michael Babich, an Arizona resident and a former company CEO.
Kapoor will be sentenced Jan. 23 along with Alec Burlakoff, a North Carolina resident who was the company's vice president of sales.
Babich and Burlakoff both pleaded guilty and were key witnesses for prosecutors.