Insys Therapeutics

Seven former executives and managers employed by Insys were taken into custody by law enforcement on Thursday, December 13, 2016. U.S. Attorney for the District of Massachusetts, Carmen Ortiz, alleged that several former employees of Insys Therapeutics, Inc. - including the once CEO and president of the company - conspired to bribe medical staff in several states to get them to prescribe a specific pain medication.[8] This was the topic of an NBC special feature report on Megyn Kelly's Sunday Night on Sunday, June 4, 2017.[9]

In August 2017, Insys Therapeutics was sued by Arizona Attorney General, Mark Brnovich, for misleading patients and doctors about the dangers of the drug Subsys, and for lying to insurers about the condition of the patients in a bid to get payment for the drug. He said the firm deceived insurers and pharmaceutical benefit companies into agreeing to pay for the expensive drug by misleading them to believe that the payment request was coming from a doctor's office and not the company making the drug. Brnovich also said those Insys employees misrepresented the medical conditions of the patients, lying that they had breakthrough pain, lying that the patients had tried other medications, and lying that the patients needed the sublingual spray rather than less expensive pills marketed by other firms because they had difficulty swallowing.[10] Insys Therapeutics issued a response to the Arizona filing on their website, stating, in part, that "[t]he allegations contained in the Arizona Attorney General’s complaint relate to former employees and physicians that are no longer associated with our Company or our speaker bureau."[11]

In October 2017, Insys founder John Kapoor was arrested in Arizona and charged with RICO conspiracy, conspiracy to commit wire fraud, and conspiracy to violate the Anti-Kickback Law related to Insys' effort to secure prescriptions of Subsys. Kapoor is also alleged to have conspired to defraud health insurance providers.[12]

In December 2018, former Insys CEO Michael Babich agreed to plead guilty to one count of conspiracy and one count of mail fraud, in connection to bribes paid to doctors and their assistants.[13][14]

In April 2019, Alec Burlakoff, the former vice president of sales for Insys, agreed to pay the State of Arizona $9.5 million in a civil settlement with Attorney General Mark Brnovich for his role in the alleged bribery campaign of doctors to prescribe Insys to patients.[15] Brnovich had accused Burlakoff of operating a program that paid doctors lucrative "speaking fees" in order to encourage them to prescribe more Subsys, Insys' fentanyl-based pain medication.[16] Burlakoff is required to pay the state $5.2 million from the proceeds he made from the operation, as well as $4.3 million in civil penalties. As part of the settlement, Burlakoff agreed to testify against Insys in ongoing litigation and will be permanently banned from advertising or selling any pharmaceutical drugs in Arizona.[15]

On May 2, 2019, a federal jury found top executives of Insys Therapeutics guilty of racketeering charges. The jury, after deliberating for 15 days, issued guilty verdicts against the company’s founder, the onetime billionaire John Kapoor, and four former executives, finding they had conspired to fuel sales of its highly potent drug, Subsys, by not only bribing doctors to prescribe their product but also by misleading insurers about patients’ need for the drug.[4][17] Other Insys employees also found guilty were: Richard M. Simon, former national director of sales; Sunrise Lee, regional sales director; and Joseph A. Rowan, regional sales director; and former vice president of managed markets, Michael J. Gurry.[18] A sentencing hearing has not been scheduled but is expected to take place in early August 2019.[18] In June 2019, Insys Therapeutics agreed to pay $225 million to settle the federal government's criminal and civil investigations into the company's marketing practices.[19]

In fall 2017, Kapoor was arrested and charged with numerous felony counts including RICO conspiracy, conspiracy to commit wire fraud, and other crimes. In June 2019, he was found guilty on all counts, and in January, was sentence by a federal court to 5.5 years in prison.

The Company filed bankruptcy in Delaware Bankruptcy Court on June 10, 2019. Andrew Long, the company's CEO claims the company is struggling due to 1) extensive litigation and 2) declining revenues relating to its Subsys product. The bankruptcy filing comes just ten days after the company reached a settlement with the US Justice Department. The US government has agreed to accept an unsecured claim of $190 million in the case.[20][21]

In 2016, Insys donated $500,000 to Arizonans for Responsible Drug Policy, a group opposing a marijuana legalization ballot initiative in the state of Arizona.[22] Investor filings confirm the company was concerned about the impact of legalization on sales for a cannabis-based drug it was developing.[23] The reason publicly given for opposing the measure was to "protect children".[23] However, medical marijuana advocates have criticized Insys' position as profit driven and as an appeal to emotion, as the company actively developed cannabis derived products.[5] In a September 2016 statement, J.P. Holoyak, a representative from the pro-legalization campaign commented, "It appears they are trying to kill a non-pharmaceutical market for marijuana in order to line their own pockets."[24] That same month the opposition campaign defended Insys's involvement, stating: "We are grateful that Insys Therapeutics – an Arizona-based company – has chosen to join Governor Ducey, the Arizona Association of County School Superintendents, the Arizona Small Business Association, the Arizona Hospital and Healthcare Association, the Arizona Catholic Conference of Bishops, the Arizona Chamber of Commerce and several other community organizations in defeating Prop. 205 in November."[24] The measure would eventually fail to pass at the ballot, losing 51.32% to 48.68%.[25]

In 2017, US Senator Claire McCaskill released a report and audio recording of an Insys representative allegedly falsely claiming to represent a doctor's office and lying about a patient's diagnosis in order to circumvent prescribing rules for Subsys.[6] The patient later died due to an adverse reaction to her medications.[6]