Billionaire founder of Insys pleads not guilty to opioid bribe scheme

BOSTON (Reuters) - The billionaire founder of drugmaker Insys Therapeutics Inc pleaded not guilty on Thursday to charges that he participated in a scheme to bribe doctors to prescribe a fentanyl-based spray to treat pain in cancer patients.

FILE PHOTO: The billionaire founder of Insys Therapeutics Inc. John Kapoor, exits the federal court house after a bail hearing in Phoenix, Arizona , U.S., October 27, 2017. REUTERS/Conor Ralph/File Photo

John Kapoor, who stepped down as Insys’ chief executive officer and chairman in January but remains its majority shareholder, entered his plea in Boston federal court to charges of conspiracy to commit racketeering, mail fraud and wire fraud.

Kapoor, 74, was arrested in Phoenix, Arizona, on Oct. 26. In court papers filed ahead of the hearing, Kapoor’s lawyers called the allegations against him “thin.”

“He doesn’t believe it’s a strong case,” Brian Kelly, Kapoor’s lawyer, said. “He wants to fight this case.”

U.S. authorities have been fighting an opioid addiction epidemic that the U.S. Centers for Disease Control and Prevention linked to more than 33,000 deaths in 2015, the latest year for which statistics are available.

The case followed investigations centered on Chandler, Arizona-based Insys’ product Subsys, an under-the-tongue spray that contains fentanyl, a synthetic opioid.

Following Kapoor’s arrest, Insys on Oct. 29 announced he had resigned from its board and it had recorded $150 million as its best estimate for the minimum amount it would pay to settle the U.S. Department of Justice probe.

Kapoor was charged in an indictment that added him as a defendant in a case against six former Insys executives and managers initially charged in December 2016, including ex-Chief Executive Michael Babich.

The indictment said that, beginning in 2012, Kapoor, Babich and others devised a scheme to pay speaker fees and other bribes to medical practitioners to prescribe Subsys and to defraud insurers into approving payment.

In court, Kelly urged U.S. Magistrate Judge Jennifer Boal to lift a requirement that Kapoor wear an electronic GPS-monitoring bracelet while free on a $1 million bond. His lawyers said the device interfered with his daily jogging.

Assistant U.S. Attorney Nathaniel Yeager objected, saying prosecutors worried Kapoor could use his wealth to flee the country. He said prosecutors believe Kapoor has access to at least $2 billion.

“The amount of money he has, we could never really secure his presence, and we’d have a very difficult time getting him back,” Yeager said.

Kelly countered that Kapoor knew about the investigation since 2013 yet never fled. Boal did not immediately rule.

Reporting by Nate Raymond in Boston; Editing by David Gregorio and Bernadette Baum