Business & Tech

Opioid maker’s former executives ‘put profit over people,’ prosecutor says

Associated Press/File 2017
Insys Therapeutics founder John Kapoor left US District Court in Phoenix in 2017.

A pharmaceutical tycoon who got a new opioid painkiller approved for cancer patients in 2012 ran the business like a criminal racket, paying millions in bribes and kickbacks to doctors to get them to prescribe the addictive drug to people who hadn’t been diagnosed with cancer, a prosecutor said Monday in federal court in Boston.

John N. Kapoor, founder of Arizona-based Insys Therapeutics, masterminded a scheme that paid eight practitioners alone more than $1.1 million to get them to prescribe Subsys, Assistant US Attorney David Lazarus said in an opening statement to jurors as the trial of Kapoor and four other former Insys executives got underway.

“This is a case about greed, about greed and its consequences, and what happens when you put profit over people,” Lazarus said.

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Holding a large cardboard chart depicting the Insys leadership team, Lazarus characterized the company as a “criminal enterprise from top to bottom.” Prosecutors say the defendants conspired to violate the Racketeer Influenced and Corrupt Organizations Act, or RICO. Prosecutors typically use RICO to go after mobsters.

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Lazarus said one of the defendants, Sunrise Lee — a sales executive who had previously worked as a stripper and escort service manager — went so far as to give a lap dance to an Illinois doctor to get him to prescribe Subsys, an under-the-tongue fentanyl spray approved for severe cancer-related pain. That doctor, Paul Madison, was found guilty in Chicago in November of all 11 federal crimes with which he was charged, including health care fraud.

But Kapoor’s lawyer, Beth Wilkinson, said the prosecution’s case is riddled with falsehoods, omissions, and distortions.

Kapoor, she said, was a hard-driving 75-year-old businessman and scientist who shepherded Subsys to government approval after watching his wife suffer horrific pain before she died of metastatic breast cancer in 2005.

“He did not want that to happen to anybody else,” she said. The Indian-born Kapoor invested millions of dollars of his own to develop a spray that would be more effective and work faster than four other fentanyl brands on the market.

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Kapoor never engaged in illegal marketing, she said, adding that a number of drug companies pay physicians speaker fees and give generous bonuses to successful sales staffers.

Subsys, she added, has played an insignificant role in the nation’s opioid crisis and accounts for three-hundredths of 1 percent of all opioid prescriptions.

The prosecution plans to call as witnesses several former Insys executives who participated in the alleged conspiracy, including Alec Burlakoff, a former vice president, and Michael Babich, who was once the firm’s CEO.

Burlakoff pleaded guilty in November to a count of racketeering conspiracy and agreed to cooperate with prosecutors. Babich pleaded guilty earlier this month to a count of conspiracy and a count of mail fraud.

But Wilkinson and lawyers for the other former executives said that neither one of the men is credible. She said Burlakoff “cut a side deal” with one of the doctors who received payments from Insys to get him to prescribe more Subsys.

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The trial, before US District Judge Allison Burroughs, is expected to last up to 14 weeks. It is the first criminal trial of pharmaceutical executives who marketed an opioid painkiller since the crisis began.

OxyContin maker Purdue Pharma, a privately held company in Stamford, Conn., has drawn far more attention during the epidemic, which federal officials say killed nearly 400,000 people from 1999 to 2017.

But Purdue has been treated comparatively mildly. In 2007, as deadly opioid overdoses surged across the country, Purdue admitted to a felony of lying about OxyContin’s potential for abuse and addiction, and three current and former Purdue executives pleaded guilty in Virginia to a federal misdemeanor charge of misbranding. No one went to jail.

As Assistant US Attorney Lazarus told it, Subsys had to compete with four other fast-acting fentanyl products marketed by rivals. To get doctors to prescribe the new product — which could cost as much as $19,000 a month for each patient — Kapoor hatched a scheme with the other defendants, Lazarus said.

They paid doctors and nurse practitioners around the country millions of dollars in kickbacks and bribes that were disguised as fees for speaking about the benefits of Subsys to other physicians, he said. They targeted eight key practitioners who they thought would be receptive to prescribing the drug. Those eight ended up writing nearly 11,000 Subsys prescriptions.

To sweeten the deal, Lazarus said, Insys allegedly put employees of doctors on the payroll of Insys, which is based in Chandler, Ariz. The company also set up an “Insys Reimbursement Center” in Arizona that allegedly misrepresented patients’ histories to fool insurers, including Medicare and Medicaid, into covering the cost of the painkiller for patients who didn’t have cancer, prosecutors say.

In perhaps the most incendiary allegation, Lazarus said that Lee, the stripper-turned-sales executive, got Madison, the physician, to prescribe “a lot of Subsys” after she “gave him a lap dance” at a Chicago nightclub called the Underground.

But Lee’s lawyer, Peter Horstmann, said in his opening that she denied the allegation, although he acknowledged that Madison and employees from his office attended a party at the Underground in November 2012 with Insys employees. Horstmann said that Lee, who was hired by Burlakoff to help close Subsys sales, was “a lightning rod” for prosecutors.

“The government is objectifying her in the same way Alec Burlakoff did and Dr. Madison did,” Horstmann said.

Besides Kapoor and Lee, the other defendants are Michael Gurry, former vice president of managed markets; Joseph Rowan, a former regional director; and Richard Simon, former national director of sales.

Among the witnesses expected to be called soon by the government is Gavin Awerbuch, a Michigan doctor who Lazarus said received $138,435 in kickbacks from Insys while writing Subsys prescriptions.

Awerbuch was sentenced to 32 months in prison last year in federal court in Detroit after admitting that he wrote prescriptions for Subsys for non-legitimate uses and committed health care fraud.

Jonathan Saltzman
can be reached at jsaltzman@globe.com.