What Happened?

John Kapoor, the founder and chairman of Insys Therapeutics Inc. was indicted Thursday for allegedly bribing doctors to prescribe a fentanyl-based painkiller called Subsys for off-label use and defrauding insurance companies into pre-approving payment for the drug.

Kapoor and six other former Insys executives were charged with racketeering conspiracy, mail fraud conspiracy, wire fraud conspiracy, and conspiracy to violate the anti-kickback law for their alleged scheme to bribe physicians across the country to prescribe Subsys and to defraud insurance providers who were hesitant to pay for Subsys for patients without cancer.

According to the indictment, Kapoor, who is said to be worth $2.1 billion, was dissatisfied with Subsys’s sales after the drug launched in 2012. From May 2012 through December 2015, the indictment claims, Kapoor devised a scheme to increase profits by using bribes and kickbacks to induce doctors to prescribe Subsys in higher volumes and for non-cancer patients. The indictment alleges that these payments came in the form of speaker fees, honoraria for marketing events, food and entertainment, administrative support, and fees paid to pharmacies. When Kapoor saw that private insurers were often unwilling to approve payment of the drug for non-cancer patients, he allegedly directed employees to defraud insurance providers by disguising the identity and location of their employer, misrepresenting patient diagnoses, the type of pain being treated, and the patient’s course of treatment with other medications.

The indictment also references multiple unidentified practitioner and pharmacy co-conspirators in various states who allegedly conspired with defendants in their criminal activity.

For the Record

An official from the Office of Inspector General of the U.S. Department of Health and Human Services stated in a DOJ press release issued Thursday that the Insys executives charged “allegedly fueled the opioid epidemic by paying doctors to needlessly prescribe an extremely dangerous and addictive form of fentanyl,” and added that “[c]orporate executives intent on illegally driving up profits need to be aware they are now squarely in the sights of law enforcement.”

Kapoor’s attorney asserted in a statement to the press that Kapoor has “done nothing wrong and expects to be fully exonerated at trial.”

Kapoor is scheduled to appear in federal court in Boston, Massachusetts on November 16. Insys is also the target of ongoing civil litigation brought by state attorneys general.