As the nation’s opioid epidemic grew like wildfire, federal prosecutors were never able to pin down the drugs’ manufacturers for their role in fueling the crisis. Turns out there’s a first time for everything.
John Kapoor, founder of Insys Therapeutics, was found guilty Thursday on federal racketeering conspiracy charges. He was charged for his role in the company’s elaborate kickback scheme to goose sales of the powerful opioid spray Subsys by paying doctors.
The verdict is the first time a C-level executive has been found guilty of helping directly fuel the nation’s opioid crisis.
Alongside Kapoor, the Boston jury also found four of his co-defendants guilty, including former national sales manager Michael Gurry and three sales managers, for their roles in drumming up sales by overselling the benefits of Subsys and lining physicians’ pockets.
In addition, sales managers stood accused of treating doctors to lavish trips to strip clubs and expensive restaurants and offering jobs at the company to physicians’ family members.
The feds previously bagged Insys’ former vice president of sales, Alec Burlakoff, who reached a plea deal in November for his role as director of the paid speaker program, and former CEO Mark Babich on federal conspiracy and mail charges in January. Both men went on to testify against Kapoor in court.
In February testimony, Babich told prosecutors Kapoor was so hell-bent on driving sales that he instituted a bonus program for reps to convince doctors to prescribe high amounts of Subsys spray. Kapoor pleaded not guilty to the charges.
In a particularly poignant piece of evidence at trial, prosecutors showed an internal promotional video with Burlakoff and other sales managers rapping about courting physicians and capitalizing on opioid titration, or boosted dosages for patients who develop a tolerance to the drug.
“To be great, it takes a decision to be better than the competition,” the reps rapped. “Get a speaker you can meet with over supper. We can come to your office. We can go and bring some lunch in. While your staff is getting fed we can start discussing Subsys.”
Insys said Thursday that Kapoor's shares of the company were being held in an independent trust without his involvement.
" It is expected that this arrangement will continue pending final decision on the disposition of those shares," Insys spokeswoman Jackie Marcus said in an email.
Following the departure of Kapoor, Babich and Burkaloff, Insys pledged to divest the opioid side of the business, pivoting to other applications of its nasal spray technology and cannibinoid research and manufacturing.
With the federal case coming to a close, Kapoor and Babich both face state criminal charges in Arizona in an ongoing investigation by state Attorney General Mark Brnovich.
In early April, Burlakoff pleaded guilty and turned state’s evidence in a parallel lawsuit implicating Insys executives in the bribery scheme. In addition to admitting his role in the scheme, Burlakoff was forced to forfeit $9.5 million to the state.
Editor's Note: This story has been updated to include a statement from Insys.