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Founder and Former Chairman of the Board of Insys Therapeutics Sentenced to 66 Months in Prison

OCI BadgeDepartment of Justice
U.S. Attorney’s Office
District of Massachusetts

FOR IMMEDIATE RELEASE
Thursday, January 23, 2020

Defendant sentenced for his role in bribing practitioners to prescribe highly addictive pain medication, often when medically unnecessary

BOSTON – The founder of Insys Therapeutics, John Kapoor, was sentenced today in federal court in Boston for orchestrating a scheme to bribe practitioners to prescribe Subsys, a fentanyl-based pain medication, often when medically unnecessary.

John Kapoor, 76, of Phoenix, Ariz., was sentenced by U.S. District Court Judge Allison D. Burroughs to 66 months in prison, three years of supervised release, and ordered to pay forfeiture and restitution to be determined at a later date. The government recommended a sentence of 15 years in prison.

In May 2019, Kapoor was convicted by a federal jury of racketeering conspiracy along with four other Insys executives.

As a veteran of the pharmaceutical industry, Kapoor learned that he could profit from developing a spray delivery system for a generic drug, then marketing it as a premium product. Kapoor privately funded Insys as it developed Subsys, which was eventually approved to treat cancer patients suffering intense breakthrough pain. With such significant personal financial investment, Kapoor was committed to ensuring that Insys was successful, and he did so by exercising tight control on all aspects of corporate decision making. Kapoor hired, or authorized the hiring of, several top executives who became co-conspirators in the criminal scheme to bribe practitioners, many of whom operated pain clinics, to prescribe Subsys to patients, often when medically unnecessary

In 2012, Kapoor authorized the use of “speaker programs” purportedly intended to increase brand awareness of Subsys through peer-to-peer educational lunches and dinners. However, the programs were used as a vehicle to pay bribes and kickbacks to targeted practitioners in exchange for increased Subsys prescriptions and increased dosage. Kapoor insisted that profits generated should double the amount of money spent paying doctors. In October 2012, Kapoor instructed the Vice President of Marketing to calculate the return on investment (ROI) for each speaker to determine if the speaker had a “positive ROI.” Practitioners who failed to meet satisfactory prescribing requirements were ousted from the speaker program. Kapoor approved bribing doctors that he knew abusively prescribed opioids.

Kapoor controlled and enforced the criminal scheme on a daily basis during a morning meeting, referred to as the “8:30 call,” which also involved many of his co-defendants. One of the topics discussed was the scheme to bribe doctors. Kapoor routinely discussed the suitability of additional funds, and which doctors were writing prescriptions for Subsys or a competitive drug.

Kapoor knew that the success of Insys depended on insurers approving payment for Subsys. In October 2012, Kapoor approved the creation of a pilot program, the “Insys Reimbursement Center” (IRC), which was dedicated to obtaining prior authorization for payment directly from insurers and pharmacy benefit managers. To do so, employees of the IRC posed as employees of the practitioner and used a script of false and misleading representations about patient diagnoses in order to secure approval for the drug by the insurance provider. For example, since insurers were more likely to authorize payment for Subsys if a patient was being treated for cancer-related pain, IRC employees were instructed to mislead insurers regarding the true diagnosis of the patient. Kapoor approved these tactics, and demanded a 100% success rate.

“Out of pure greed, Insys executives, from John Kapoor on down, bribed doctors to prescribe this powerful and highly addictive narcotic to people who did not need it.  Despite increasing public fears of a drug epidemic fueled by pain pill prescriptions, these defendants, led by Kapoor, ploughed ahead, setting weekly quotas for doctors on their payroll, urging them to prescribe Subsys in higher and higher doses, all so they could make millions of dollars at patients’ expense.  Their disregard for the public’s health and safety is nothing short of appalling.  This case is not only about punishing these defendants.  It is also about making the next pharmaceutical company think twice about its sales tactics and the basic corporate responsibility to not victimize the public,” said United States Attorney Andrew E. Lelling.  “This was a landmark prosecution that successfully held accountable a pharmaceutical company’s top executives for their roles in the illicit marketing and prescribing of opioids.”

“John Kapoor and his loyal lieutenants minimized their actions and distanced themselves from the harm they were committing on patients whose lives they ultimately ruined, and now all of them are finally being held accountable for their criminal conduct,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Their downfall illustrates the FBI’s commitment to attacking the ongoing opioid crisis from every angle, and we will continue to identify and dismantle criminal enterprises like this one to ensure those who are responsible for patient care are taking care of patients, and not themselves.”

“These sentences undoubtedly send a clear message to health care executives relying on illegal schemes to increase profits: they will be held accountable for corporate crimes. The reckless and dangerous violation of law by these pharmaceutical executives is extremely serious, and we will not tolerate those who put profits above the well-being of patients. We will continue to attack the opioid crisis from all angles, including holding the pharmaceutical industry and its leadership accountable,” said Phillip Coyne, Special Agent in Charge of the U.S Department of Health and Human Services, Office of the Inspector General.   

“The FDA continues to respond forcefully to the ongoing opioid epidemic – one of the largest public health tragedies our country has faced – by ensuring the safe and appropriate use of these powerful medications. But bribing healthcare providers to prescribe this most powerful type of opioid – an immediate release form of fentanyl – is not only unacceptable, it puts patients at serious risk of overdose and potentially death,” said Judith McMeekin, Acting Associate Commissioner for Regulatory Affairs at the U.S. Food and Drug Administration. “This conduct cannot be tolerated, and the FDA remains fully committed to working with our law enforcement partners to bring to justice those who place profits before the public’s health.”

“The reckless actions by this executive whose product included controlled medications increased the potential for diversion and addiction, which jeopardizes the public health and safety,” said Drug Enforcement Administration Special Agent in Charge Brian D. Boyle.  “DEA pledges to work with our law enforcement and regulatory partners to ensure that rules and regulations are followed.”

“Ensuring the integrity of TRICARE and combatting the dangers posed to military members and their dependents by improperly prescribed opioids are top priorities for the Defense Criminal Investigative Service (DCIS),” stated Leigh-Alistair Barzey, Special Agent in Charge of the DCIS Northeast Field Office. “Today's sentencing marks the successful conclusion of this investigation and demonstrates the DCIS’ ongoing commitment to work with its law enforcement partners and the USAO-MA to identify, investigate and prosecute individuals and pharmaceutical companies that seek to fraudulently profit at the expense of patients.”

“John Kapoor and the other executives in this case criminally conspired to place profits before patients, all to drive sales of a highly potent and addictive opioid. The prosecution of these pharmaceutical executives demonstrates that healthcare fraud will not be tolerated.  The Employee Benefits Security Administration will continue collaborating with our law enforcement partners in these important investigations to protect participants in private sector health plans, detect and deter health care fraud, and contribute to fighting the opioid epidemic,” said Carol S. Hamilton, Acting Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration, Boston Regional Office.

“Today’s sentence is the result of a coordinated investigation by law enforcement agencies who are committed to ending the nation’s opioid crisis,” said Inspector in Charge Joseph W. Cronin of the U.S. Postal Inspection Service’s Boston Division. “Insys Therapeutics executives profited by offering bribes and kickbacks in exchange for prescriptions of a highly addictive fentanyl spray. These practices put the health of the American public at risk and jeopardized the integrity of our mail system.”

“The defendants in this investigation put the company’s bottom line before the welfare of the patients who were in need of genuine care,” said Matt M. Modafferi, Special Agent in Charge of U.S. Postal Service Office of Inspector General. “The sentences imposed on the defendants will serve as a reminder that there are severe consequences when individuals and companies use these types of tactics in order to drive up their pharmaceutical sales. I commend the U.S. Attorney’s Office and our law enforcement partners for their tireless efforts leading up to and through the successful ten-week trial of the defendants.”

“These sentences not only hold the defendants accountable, they demonstrate the ongoing commitment of VA OIG to ensure the safety and integrity of VA healthcare programs.  VA OIG and its law enforcement partners will continue to vigorously investigate healthcare fraud at VA and hold accountable anyone who puts the well-being of veterans, their dependents, or the public at risk,” said Acting SAC Jeff Stachowiak.

Thomas W. South, Deputy Assistant Inspector General for Investigations, OPM OIG said: “There is no doubt that the unscrupulous practices of Insys Therapeutics and its founder John Kapoor have fueled the devastating national opioid epidemic. We are incredibly proud to have been a part of this groundbreaking case and I applaud the exceptional work of our investigators and law enforcement partners. Bribing physicians across the country to overprescribe Subsys risked the lives of thousands of patients and today’s sentencing is an important step toward accountability and justice.” 

Assistant U.S. Attorneys K. Nathaniel Yeager, Fred M. Wyshak and David G. Lazarus prosecuted the case for Lelling’s Health Care Fraud Unit.

Topic(s):
Health Care Fraud
Component(s):
USAO - Massachusetts