Defendant and other executives allegedly bribed doctors and
pharmacists to prescribe fentanyl spray meant for breakthrough cancer pain
The founder and majority owner of Insys Therapeutics Inc.,
was arrested today and charged with leading a nationwide conspiracy to profit
by using bribes and fraud to cause the illegal distribution of a Fentanyl spray
intended for cancer patients experiencing breakthrough pain.
"More than 20,000 Americans died of synthetic opioid
overdoses last year, and millions are addicted to opioids. And yet some medical
professionals would rather take advantage of the addicts than try to help
them," said Attorney General Jeff Sessions. "This Justice Department
will not tolerate this. We will hold
accountable anyone – from street dealers to corporate executives -- who
illegally contributes to this nationwide epidemic. And under the leadership of President Trump,
we are fully committed to defeating this threat to the American people.”
John N. Kapoor, 74, of Phoenix, Ariz., a current member of
the Board of Directors of Insys, was arrested this morning in Arizona and
charged with RICO conspiracy, as well as other felonies, including conspiracy
to commit mail and wire fraud and conspiracy to violate the Anti-Kickback Law.
Kapoor, the former Executive Chairman of the Board and CEO of Insys, will
appear in federal court in Phoenix today.
He will appear in U.S. District Court in Boston at a later date.
The superseding indictment, unsealed today in Boston, also
includes additional allegations against several former Insys executives and
managers who were initially indicted in December 2016.
The superseding indictment charges that Kapoor; Michael L.
Babich, 40, of Scottsdale, Ariz., former CEO and President of the company; Alec
Burlakoff, 42, of Charlotte, N.C., former Vice President of Sales; Richard M.
Simon, 46, of Seal Beach, Calif., former National Director of Sales; former
Regional Sales Directors Sunrise Lee, 36, of Bryant City, Mich., and Joseph A.
Rowan, 43, of Panama City, Fla.; and former Vice President of Managed Markets,
Michael J. Gurry, 53, of Scottsdale, Ariz., conspired to bribe practitioners in
various states, many of whom operated pain clinics, in order to get them to
prescribe a fentanyl-based pain medication.
The medication, called “Subsys,” is a powerful narcotic intended to
treat cancer patients suffering intense breakthrough pain. In exchange for bribes and kickbacks, the practitioners
wrote large numbers of prescriptions for the patients, most of whom were not
diagnosed with cancer.
The indictment also alleges that Kapoor and the six former
executives 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. They achieved this goal by
setting up the “reimbursement unit,” which was dedicated to obtaining prior
authorization directly from insurers and pharmacy benefit managers.
“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,” said Acting United States Attorney William D.
Weinreb. “Today's arrest and charges reflect our ongoing efforts to attack the
opioid crisis from all angles. We must hold the industry and its leadership
accountable - just as we would the cartels or a street-level drug dealer.”
“As alleged, these executives created a corporate culture at
Insys that utilized deception and bribery as an acceptable business practice,
deceiving patients, and conspiring with doctors and insurers,” said Harold H.
Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston
Field Division. “The allegations of selling a highly addictive opioid cancer
pain drug to patients who did not have cancer, make them no better than
street-level drug dealers. Today's charges mark an important step in holding
pharmaceutical executives responsible for their part in the opioid crisis. The FBI will vigorously investigate corrupt
organizations with business practices that promote fraud with a total disregard
for patient safety.”
“These Insys executives allegedly fueled the opioid epidemic
by paying doctors to needlessly prescribe an extremely dangerous and addictive
form of fentanyl,” said Phillip Coyne, Special Agent in Charge for the Office
of Inspector General of the U.S. Department of Health and Human Services. “Corporate executives intent on illegally
driving up profits need to be aware they are now squarely in the sights of law
enforcement.”
“As alleged, Insys executives improperly influenced health
care providers to prescribe a powerful opioid for patients who did not need it,
and without complying with FDA requirements, thus putting patients at risk and
contributing to the current opioid crisis,” said Mark A. McCormack, Special
Agent in Charge, FDA Office of Criminal Investigations’ Metro Washington Field
Office. “Our office will continue to work with our law enforcement partners to
pursue and bring to justice those who threaten the public health.”
“Pharmaceutical companies whose products include controlled
medications that can lead to addiction and overdose have a special obligation
to operate in a trustworthy, transparent manner, because their customers’
health and safety and, indeed, very lives depend on it,” said DEA Special Agent
in Charge Michael J. Ferguson. “DEA
pledges to work with our law enforcement and regulatory partners nationwide to
ensure that rules and regulations under the Controlled Substances Act are
followed.”
“Today’s arrest is the result of a joint effort to identify,
investigate and prosecute individuals who engage in fraudulent activity and
endanger patient health,” stated Special Agent in Charge Leigh-Alistair Barzey,
Defense Criminal Investigative Service (DCIS) Northeast Field Office. “DCIS will continue to work with the U.S.
Attorney’s Office, District of Massachusetts, and our law enforcement partners,
to protect U.S. military members, retirees and their dependents and the
integrity of TRICARE, the Defense Department’s healthcare system.”
“As alleged, John Kapoor and other top executives committed
fraud, placing profit before patient safety, to sell a highly potent and
addictive opioid. EBSA will take every
opportunity to work collaboratively with our law enforcement partners in these
important investigations to protect participants in private sector health plans
and contribute in fighting the opioid epidemic,” said Susan A. Hensley,
Regional Director of the U.S. Department of Labor, Employee Benefits Security
Administration, Boston Regional Office.
“Once again, the United States Postal Inspection Service is
fully committed to protecting our nation’s mail system from criminal misuse,”
said Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection
Service. “We are proud to work alongside our law enforcement partners to
dismantle high level prescription drug practices which directly contribute to
the opioid abuse epidemic. This
investigation highlights our commitment to defending our mail system from
illegal misuse and ensuring public trust in the mail.”
“The U.S. Department of Veterans Affairs, Office of Inspector
General will continue to aggressively investigate those that attempt to
fraudulently impact programs designed to benefit our veterans and their
families,” said Donna L. Neves, Special Agent in Charge of the VA OIG Northeast
Field Office.
The charges of conspiracy to commit RICO and conspiracy to
commit mail and wire fraud each provide for a sentence of no greater than 20
years in prison, three years of supervised release and a fine of $250,000, or
twice the amount of pecuniary gain or loss.
The charges of conspiracy to violate the Anti-Kickback Law provide for a
sentence of no greater than five years in prison, three years of supervised
release and a $25,000 fine. Sentences are imposed by a federal district court
judge based upon the U.S. Sentencing Guidelines and other statutory factors.
The investigation was conducted by a team that included the
FBI; HHS-OIG; FDA Office of Criminal Investigations; the Defense Criminal
Investigative Service; the Drug Enforcement Administration; the Department of
Labor, Employee Benefits Security Administration; the Office of Personnel
Management; the U.S. Postal Inspection Service; the U.S. Postal Service Office
of Inspector General; and the Department of Veterans Affairs. The U.S. Attorney’s Office would like to acknowledge
the cooperation and assistance of the U.S. Attorney’s Offices around the
country engaged in parallel investigations, including the District of
Connecticut, Eastern District of Michigan, Southern District of Alabama,
Southern District of New York, District of Rhode Island, and the District of
New Hampshire. The efforts of the
Central District of California and the Justice Department’s Civil Fraud Section
of the Department of Justice are also greatly appreciated.
Assistant U.S. Attorneys K. Nathaniel Yeager, Chief of
Weinreb’s Health Care Fraud Unit, and Susan M. Poswistilo, of Weinreb’s Civil
Division, are prosecuting the case.
The details contained in the charging documents are
allegations. The defendants are presumed
innocent unless and until proven guilty beyond a reasonable doubt.
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