May 2, 2019 / 6:16 PM / 4 months ago

Founder, execs of drug company guilty in conspiracy that fed opioid crisis

BOSTON (Reuters) - The founder of Insys Therapeutics Inc on Thursday became the highest-ranking pharmaceutical executive to be convicted in a case tied to the U.S. opioid crisis, when he and four colleagues were found guilty of participating in a scheme to bribe doctors to prescribe an addictive painkiller.

FILE PHOTO: John Kapoor (R), the billionaire founder of Insys Therapeutics Inc., leaves the federal courthouse during the trial accusing Insys executives of a wide-ranging scheme to bribe doctors to prescribe an addictive opioid medication, in Boston, Massachusetts, U.S., March 13, 2019. REUTERS/Brian Snyder/File Photo

A federal jury in Boston found John Kapoor, the drugmaker’s former chairman, and his co-defendants guilty of racketeering conspiracy for engaging in a scheme that also misled insurers into paying for the drug.

Kapoor’s 2017 arrest came on the same day U.S. President Donald Trump declared the epidemic that has caused tens of thousands of overdose deaths annually a public health emergency.

Kapoor, 76, was found guilty of running a wide-ranging scheme to bribe doctors nationwide by retaining them to act as speakers at sham events at restaurants ostensibly meant to educate clinicians about its fentanyl spray, Subsys.

Prosecutors said Kapoor also directed efforts to defraud insurers who were reluctant to pay for Subsys. His co-defendants were former Insys executives and managers Michael Gurry, Richard Simon, Sunrise Lee and Joseph Rowan.

They face up to 20 years in prison. They denied wrongdoing, and defense lawyers signaled plans to appeal.

“Dr. Kapoor is disappointed in the verdict, as are we,” Beth Wilkinson, Kapoor’s lead attorney, said in a statement. “Four weeks of jury deliberations confirm that this was far from an open-and-shut case.”

The U.S. Food and Drug Administration approved Subsys in 2012 only for use in treating severe cancer pain. Yet prosecutors claimed doctors who took bribes often prescribed Subsys to patients without cancer, helping boost sales for Chandler, Arizona-based Insys.

Fentanyl is an especially potent opioid, 100 times stronger than morphine.

Kapoor’s lawyers acknowledged Insys paid doctors but contended he believed they were being legally paid to discuss Subsys’ benefits.

Wilkinson in her opening statement in January told jurors Kapoor had no knowledge of “side deals” being cut with doctors. She said a former executive turned government witness, Alec Burlakoff, kept Kapoor in the dark about them.

Burlakoff, Insys’ ex-vice president of sales, and Michael Babich, its former chief executive, testified against Kapoor after pleading guilty to participating in the scheme.

Jurors during the trial watched a rap video Insys produced for its sales staff describing its strategies to boost sales that starred Burlakoff dressed as a dancing bottle of Subsys.

Witnesses also testified that Lee, an ex-stripper turned Insys regional sales director, gave a lap dance to a doctor at a Chicago club while pushing him to prescribe Subsys.

Insys in August said it had agreed to pay at least $150 million in a related settlement with the U.S. Justice Department. In a statement on Thursday, it said the case involved “the actions of a select few former employees.”

Reporting by Nate Raymond; Editing by Scott Malone and Bill Berkrot

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