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Pharmaceutical Executive Found Guilty of Racketeering Conspiracy in Landmark Bribery Case Involving False Claims

On May 2, Insys Therapeutics ("Insys") founder, John Kapoor, and four co-defendants were found guilty of a racketeering conspiracy for running a nationwide bribery scheme involving the over-prescription of opioids. Kapoor is among the highest-ranking pharmaceutical executives to be held responsible and face trial for their part in the opioid crisis.  The charges carry up to 20 years in prison.

Insys is a large American specialty pharmaceutical company based in Chandler, Arizona. Its main product, Subsys, a sublingual spray of fentanyl, is a powerful opioid most often prescribed to cancer patients. 

The Case Against Kapoor

The federal government accused Kapoor and his co-defendants of running a bribery scheme where Insys paid doctors to prescribe its medication and then lied to insurance companies in order to ensure that the medicine would be covered. Insys targeted doctors with a past record of overprescribing opioids, and then invited them to participate in speaking programs and lectures, events they were paid to attend, with the caveat that they would encourage their patients to use Subsys and write more prescriptions for the drug.  In many cases, Subsys would be prescribed to patients who didn't need the medication, which is extremely dangerous considering how addictive fentanyl is. 

The government also reported that Insys set up a call center where the companies employees would call insurance companies and pretend to be calling from doctors' offices to verify that insurance companies would cover Subsys.

Trial Developments

The defense attorneys for Kapoor and his co-defendants called a handful of witnesses during the trial, including patients who vouched that Subsys helped reduce their pain. On the other hand, federal prosecutors called 39 witnesses that framed Kapoor as a money-motivated individual who was willing to put peoples' lives at stake in order to make a profit.   The defense claimed that Kapoor was unaware of the illegal activity going on within his company, and they put the blame on several former employees.  One of these employees is Alec Burlakoff , the former vice president of sales at Insys.  He and several other former employees pled guilty and testified for the prosecution in the hopes of receiving a more lenient sentencing. 

Throughout the trial, the company faced many financial and management problems. Insys has revealed to investors that it is at risk of going out of business, "estimat[ing] that the liability arising from the settlement of ongoing litigations would exceed $240.3 million." On May 13th, company stock fell 70 percent overnight; since their high point as a company in 2015, their shares have fallen 90 percent.

Rare Racketeering Charges

Brad Bailey, a criminal defense attorney in Boston and a former federal prosecutor, who has been following this case, said the 10-week trial represented a rare instance where the federal government used criminal charges to go after corporate executives.

"That's always unusual. That's always an attention grabber," said Bailey. "The big issue is the use of racketeering charges, which had been originally designed to go after the Mafia." Bailey said that going after Kapoor and his co-defendants for racketeering essentially equates the practices at Insys with organized crime.

Opioid Crisis and the False Claims Act

Opioid addiction continues to be a serious issue in the United States, and these kinds of troubling industry practices have helped create and continue to fuel the opioid crisis. Insys previously settled False Claims Act allegations for allegedly paying doctors to promote Subsys, the same drug at issue in this case.  Read more about this settlement and how the False Claims Act interacts with the opioid crisis here.

If you are aware of fraud against the government, whether in healthcare or another sector, you may be eligible to blow the whistle in a False Claims Act lawsuit and may be entitled to a portion of the recovery. To find out more, contact Goldberg Kohn for a confidential consultation.

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