Insys founder identified as co-conspirator in doctor bribing case

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US prosecutors have identified Insys Therapeutics‘ billionaire founder as an unindicted co-conspirator in a case accusing six former executives and managers of participating in a scheme that involved bribing doctors to prescribe the fentanyl-based drug, subsys.

Reuters Health reports that John Kapoor, who stepped down as CEO of Insys in January, was among 80 people prosecutors described as unindicted co-conspirators in an exhibit recently filed by prosecutors in federal court in Boston.

“He’s done nothing wrong, he hasn’t been charged, and he’s made extensive efforts to improve the situation at the company,” said Kapoor’s lawyer, Brian Kelly, at the law firm Nixon Peabody. Kelly said his client’s inclusion on the list was a “meaningless evidentiary tactic” to enable prosecutors to introduce statements made by Kapoor at the trial of former CEO Michael Babich and the other five defendants.

The report says an unindicted co-conspirator is someone prosecutors claim participated in a criminal scheme but who has not been charged. Reasons can include insufficient evidence, pragmatic concerns, a person’s cooperation or evidentiary strategy, according to Robert Bloom, a professor at Boston College Law School. A spokesperson for the US Attorney’s Office and Chandler, Arizona-based Insys declined to comment.

The reports says amid a national opioid epidemic, Subsys, an under-the-tongue fentanyl-based spray made by Insys and intended for cancer patients, has become the focus of several federal and state investigations. Federal prosecutors claim Babich and the other defendants participated in a scheme to pay doctors speaker fees in exchange for prescribing Subsys and to mislead insurers into paying for the drug even when it was prescribed to non-cancer patients.

Besides Babich, the defendants include former Insys vice presidents Alec Burlakoff and Michael Gurry; former national sales director Richard Simon; and former regional sales directors Sunrise Lee and Joseph Rowan.

The report says all six have pleaded not guilty. They are scheduled to face trial in October 2018. Lee’s lawyer declined to comment. Attorneys for the other defendants did not respond to requests for comment.

Insys has previously said that it has taken steps to strengthen its compliance programme amid probes related to former employees. It has also stressed that Subsys represented less than 1% of all opioid prescriptions in 2016. Insys has also disclosed that it is in talks with the US Justice Department to reach a settlement.

The report says Kapoor’s name appeared in an exhibit attached to a motion filed by prosecutors on 6 September, which asked a judge to weigh in on whether one of the defendant’s lawyers had a potential conflict of interest. The exhibit, a 2 February letter prosecutors sent to defence lawyers, was later sealed, but was viewed while it was publicly available.

Kapoor, who founded Insys in 2002 and remains a board member, stepped down in January as the company’s chair and CEO, a role he took on in November 2015. He is currently the chair of drugmaker Akorn Inc and president of investment firm EJ Financial Enterprises Inc.

The report says in addition to the Boston case, charges have been filed against former Insys employees and medical practitioners by federal prosecutors in states including Alabama, New York and Connecticut.

Reuters Health report

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