Insys Therapeutics Inc. founder John Kapoor is accused of helping fuel the U.S. opioid epidemic by bribing doctors to prescribe a powerful form of fentanyl to patients who didn’t need the potent drug.
Kapoor, 74, was arrested Thursday in Arizona and charged with racketeering conspiracy and other felonies. He’s scheduled to appear in a Phoenix court later in the day.
Kapoor and other former Insys executives are also accused of defrauding insurance companies that were reluctant to approve payments for the drug by improperly getting prior authorization directly from the insurers and pharmacy benefit managers, Acting U.S. Attorney William Weinreb in Boston said in a press release.
“Insys executives improperly influenced health care providers to prescribe a powerful opioid for patients who did not need it,” Mark McCormack, an FDA agent, said in the statement.
The opioid epidemic is killing 175 people a day and costing the U.S. economy billions of dollars annually, according to the government. President Donald Trump plans to declare the opioid crisis a public health emergency on Thursday.
The Insys executives are accused of bribing doctors to prescribe Subsys, a fentanyl-based spray designed to combat cancer-sufferers’ pain, to people who didn’t have cancer.
Joe McGrath, an Insys spokesman, said he couldn’t immediately comment on Kapoor’s indictment. The company has reportedly been in settlement talks with the U.S. Justice Department to resolve a probe into its Subsys marketing. The company’s shares fell more than 12 percent to $6.49 in Nasdaq trading at 1:48 p.m.
Brian Kelly, Kapoor’s Boston-based defense attorney, didn’t immediately return a call for comment about his client’s indictment on Thursday.
Kapoor stepped down as Insys’s CEO and chairman in January, about a month after prosecutors indicted the former employees in the bribery probe. Those charged included ex-CEO Michael Babich and former national sales director Richard Simon.
Some lower-level Insys employees have pleaded guilty and are cooperating with prosecutors. Elizabeth Gurrieri, a former manager who oversaw insurance reimbursements, pleaded guilty to one count of conspiring to commit wire fraud in June.
Kapoor is also the chairman and largest shareholder of Akorn Inc., which has been acquired by German health-care provider Fresenius SE for $4.3 billion in April.
Kapoor’s arrest "has no impact on the Akorn transaction," Matt Kuhn, a spokesman for Fresenius, said in an email. A representative for Akorn didn’t return calls and emails seeking comment.
The U.S. Attorney in Connecticut is conducting a criminal probe of Purdue Pharmaceutical Inc.’s marketing of OxyContin. Scores of cities and counties, as well as states, have sued companies including Purdue, Endo International Plc, and Johnson & Johnson’s Janssen Pharmaceuticals, alleging that they triggered the epidemic by minimizing the addiction and overdose risks of painkillers such as OxyContin and Percocet.
The case is U.S. v. Babich, 16-cr-10343, U.S. District Court, District of Massachusetts (Boston).
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