Former billionaire and pharmaceutical executive John Kapoor has been sentenced to five years and six months in prison. His sentencing is the first successful prosecution of a pharmaceutical executive tied to the opioid epidemic. The 76-year-old is the founder of Insys Therapeutics, which made and aggressively marketed the potent opioid painkiller Subsys. Kapoor’s 66-month prison term is substantially less than the 15-year sentence recommended by federal prosecutors, but it is more than the one year requested by his defense attorneys. U.S. District Judge Allison Burroughs explained that she reached the lesser sentence after considering Kapoor’s advanced age and philanthropy, as well as “his central role in the crime.”
Kapoor and four other executives were found guilty last year of orchestrating a criminal conspiracy to bribe doctors to prescribe the company’s medication, including to patients who didn’t need it. They then lied to insurance companies to make sure the costly oral fentanyl spray was covered. The painkiller, which was intended for cancer patients, could cost as much as $19,000 a month. An investigative report found at least 908 deaths in which Subsys is a primary suspect. The company entered into an agreement with the government to settle criminal and civil investigations. Insys admitted to the kickback scheme and agreed to pay $225 million. Shortly after the agreement was announced the company filed for bankruptcy.
Two other executives pled guilty and became cooperating witnesses. Former CEO and President of Insys Therapeutics was sentenced in federal court for bribing practitioners to prescribe Subsys, a fentanyl-based pain medication, often when medically unnecessary. Approved by the FDA only for cancer pain, doctors receiving kickbacks, prescribed the spray for routine back pain, migraines and other ailments.
Michael Babich, 43, of Scottsdale, Ariz., was sentenced to 30 months in prison, three years of supervised release, and ordered to pay restitution and forfeiture to be determined at a later date. In January 2019, Babich pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud and one count of mail fraud, and agreed to cooperate with the government. Insys sales chief Alec Burlakoff was sentenced to 26 months in prison for his role in the bribery and fraud scheme. The sales executive hired a stripper as a Subsys sales representative to help persuade doctors to boost prescriptions. The woman, named Sunrise Lee, eventually was promoted to oversee a third of the company’s sales force. She was sentenced to one year in prison for her role in the scheme.
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A trial is underway in Boston against pharmaceutical executives who prosecutors say ran a criminal scheme of bribing doctors to prescribe its’ highly addictive fentanyl spray, Subsys, to patients who didn’t need it. John Kapoor, the founder of Insys Therapeutics and former CEO, and other drug executives are accused of organizing fake speaking events to pay and influence doctors. One of the defendants, Sunrise Lee, allegedly gave a lap dance to a doctor at a company event in order to persuade him to prescribe the drug.
Subsys is a powerful pain killer used to treat cancer pain in terminally ill patients. The drug, which is made from fentanyl, is incredibly powerful, about 100 times more powerful than morphine. More than 900 people have died while using Subsys since it was approved in 2012. Kapoor, was charged by the government in 2017. The indictment against Kapoor and the other former Insys executives allege that they “conspired to mislead and defraud health insurance providers” who did not want to approve payment for Subsys when it was prescribed for patients who did not have a cancer diagnosis. The U.S. Department of Justice said the company executives were able to get around those concerns by setting up the “reimbursement unit,” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers.
The executives — Sunrise Lee, John Kapoor, Michael Gurry, Richard Simon and Joseph Rowan — deny wrongdoing and have pleaded not guilty to racketeering conspiracy. They have argued that prosecutors are trying to make an example of Insys, a small segment of the pharmaceutical industry they say is unfairly maligned by a government trying to show it is making a dent in the opioid crisis. The government also charged former CEO and company president Michael Babich and Alec Burlakoff, the former vice president of Sales. Burlakoff and Babich have pled guilty to charges tied to the racketeering and conspiracy case and have agreed to cooperate with the government. They are expected to be star witnesses for the government during the trial.
“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 government said in its 2017 announcement. Prosecutors and court documents say, Subsys’s pharmaceutical sales team used a playbook of scandalous incentives to get the drug prescribed. They hired attractive sales reps in their 20s and 30s and encouraged them to stroke doctors’ hands while “begging” them to write prescriptions.
The company offered doctors hefty speaking fees, often for events attended only by buddies and people who worked in their practices. How frequently a doctor participated in the company’s lucrative speaker program was based on how frequently doctors wrote Subsys prescriptions, prosecutors said. Insys made 18,000 payments to doctors in 2016 — a total of more than $2 million that went to headache doctors and back pain specialists.
Prosecutors say Sunrise Lee, a former dancer at a Florida strip club was hired as a sales executive despite having no academic degree and her only management experience was running an escort service. Prosecutors say Lee rose to become Insys Therapeutics’ regional sales director and once gave a doctor a lap dance during one of the speaking events. Holly Brown, the Insys sales rep who recounted the lap dance story to federal jurors, testified that Lee frequently wore low-cut tops and frequently handed out her business card to doctors “ if they wanted to discuss the Fentanyl Spray ‘in private.’ ”
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