Chandler drug company founder charged in nationwide opioid scheme

Oct 26, 2017, 9:59 AM | Updated: 11:21 am
(University of Buffalo Photo)...
(University of Buffalo Photo)
(University of Buffalo Photo)

PHOENIX — The founder of a Chandler drug manufacturer was arrested and charged Thursday in connection with a scheme to bribe doctors to prescribe an addictive opioid, the Department of Justice said.

In a release, the department said John Kapoor, the founder and former CEO of Insys Therapeutics, was charged with racketeering, conspiracy and fraud, among others. He was arrested in Phoenix.

Numerous other Insys executives in several states were also charged in the case.

“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,” FBI Special Agent Harold H. Shaw said in the release.

Kapoor, 74, could be sentenced to as long as 20 years in prison, should he be found guilty.

Insys first popped up in headlines late last year, when the Wall Street Journal reported that two Alabama doctors prescribed more than $5 million of Subsys, a highly addictive painkilling spray made from fentanyl.

According to the paper, Kapoor personally visited with the doctors involved and Insys paid them $270,000 in consulting fees that some viewed as bribes.

Arizona Attorney General Mark Brnovich filed a suit against Insys in August, alleging the company paid three doctors to prescribe its opioids.

The suit said, between March 2012 and April 2017, the three doctors were responsible for prescribing more than $33 million worth of the drug, which accounted for 64 percent of the company’s sales of Subsys in Arizona.

Insys has been sued in several states — such as IllinoisNew Jersey and Alabama — for similar schemes. It paid $4.5 million in the Illinois case and paid $500,000 to Massachusetts earlier this month.

A Rhode Island doctor pleaded guilty Wednesday to accepting $188,000 in kickbacks through a sham “speakers program” from the company in exchange for prescribing Subsys.

In Massachusetts, former Insys CEO Michael L. Babich and five other former executives and managers have pleaded not guilty and are scheduled to go to trial in October 2018. Several former Insys employees and health care providers have also pleaded guilty to felony charges in places around the country, including Alabama and Connecticut.

The company has sold more than $1 billion worth of Subsys so far.

The Arizona lawsuit also alleged Insys provided insurers with false or misleading information to authorize prescriptions.

“For example, Insys employees were allegedly instructed to mislead insurers into believing that patients who were prescribed Subsys had cancer when in fact they did not,” Brnovich said.

“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,” Shaw said.

The company also allegedly claimed the Food and Drug Administration had approved Subsys for more uses than what was actually approved, such as the treatment of minor pain.

“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,” FBI Special Agent Mark A. McCormack said in the release.

The Associated Press contributed to this report.

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Chandler drug company founder charged in nationwide opioid scheme