Founder and Owner of Insys Arrested For U.S. Opioid Bribe Case

The billionaire founder of Insys Therapeutics Inc was arrested on Thursday on U.S. charges he participated in a scheme to bribe doctors to prescribe a fentanyl-based cancer pain drug, marking a step by authorities to fight the opioid epidemic.

John Kapoor, Insys’ majority shareholder who stepped down as chief executive in January, was charged with engaging in conspiracies to commit racketeering, mail fraud and wire fraud in an indictment filed in federal court in Boston.

The initial success of that medication turned Insys into one of Arizona’s hottest stocks ever, but that was followed by a sharp downturn as the company’s profits and revenue were scaled back as the investigations widened.

Kapoor ranked sixth last year on Forbes’ list of wealthiest Arizonans with a net worth of $2.1 billion, but he dropped off this year’s list owing to the declining stock price of Insys, in which he is a controlling shareholder.

Kapoor, who also served as the company’s former executive chairman and CEO, was to appear in federal court in Phoenix on Thursday and in U.S. District Court in Boston at a later date.

“In the midst of a nationwide opioid epidemic that has reached crisis proportions, Mr. Kapoor and his company stand accused of bribing doctors to overprescribe a potent opioid and committing fraud on insurance companies solely for profit,” acting U.S. Attorney William D. Weinreb said in a statement.

 “My client is innocent and he intends to fight these charges vigorously.” Brian Kelly, Kapoor’s lawyer

Arizona-based Insys, which has been in settlement talks with the U.S. Justice Department, declined to comment. Its stock price fell 22.64 percent to close at $5.74 on Thursday.

The charges marked a major escalation of investigations related to Subsys, an under-the-tongue spray that contains fentanyl, an addictive synthetic opioid. They came as U.S. President Donald Trump on Thursday declared the opioid crisis a public health emergency.

Acting U.S. Attorney William Weinreb said the charges reflected authorities’ commitment to combat the opioid abuse epidemic. According to the U.S. Centers for Disease Control and Prevention, opioids were involved in over 33,000 deaths in 2015.

Kapoor, who has a $1.8 billion net worth, stepped down from his role as CEO and chairman in January, though he remained on the Board of Directors and still holds a roughly 70% stake in the company, which has seen its stock drop 34% in the last year. Kapoor also holds a stake in generic drug manufacturer Akorn Pharmaceuticals.

Insys sells a drug called Subsys, a a pain-relieving dose of fentanyl that is sprayed beneath the tongue. It was supposed to be used only for cancer patients experiencing pain even though they were already taking other painkillers. But the indictment alleges that Kapoor and his colleagues bribed doctors to prescribe it to other patients, potentially contributing to the nation’s opioid crisis.

“As alleged, Insys executives improperly influenced health care providers to prescribe a powerful opioid for patients who did not need it, and without complying with [Food and Drug Administration] requirements, thus putting patients at risk and contributing to the current opioid crisis,” said Mark A. McCormack, special agent in charge, of the FDA’s Office of Criminal Investigations.

Insys did not immediately respond to a request for comment. Earlier this month, the company agreed to pay Massachusettes $500,000 to resolve similar charges brought by the state.

Insys has also been the subject of an investigation by Sen. Claire McCaskill (D-Mo.). After Kapoor’s arrest on Wednesday, McCaskill said “anyone, including top executives, who potentially violated criminal law should be aggressively prosecuted.”

“Evidence from our investigation suggests that Insys was engaged in systemic fraud and took actions that directly harmed their own customers and public health as a whole. This company has repeatedly gotten away with fines that amounted to a slap on the wrist for actions that helped fuel a nationwide epidemic that’s claimed hundreds of thousands of American lives,” she said.