Insys Founder Arrested Over Subsys Fentanyl Spray Marketing, Resigns from Company Board

Published on October 30, 2017 by Sandy Liebhard

The billionaire founder of Insys Therapeutics, Inc. has resigned, following his arrest last week on federal racketeering and conspiracy charges related to the marketing of the company’s opioid painkiller, Subsys spray.

What is Subsys Spray?

John Kapoor founded Insys in 1990. The company’s Subsys spray was approved in 2012 to treat cancer patients suffering from intolerable levels of pain.

Subsys contains fentanyl, an opioid painkiller 80-times more powerful than morphine and 50-times more powerful than heroin. Because of its highly-addictive nature, Subsys may only be prescribed by a medical practitioner registered with the Drug Enforcement Administration.

A a growing number of Subsys lawsuits have been filed in recent months on behalf of patients who allegedly suffered fatal overdoses and other complications related off-label use of the drug.

Federal Prosecutors Allege Kapoor Conspired to Bribe Doctors to Prescribed Subsys

The 74-year-old Kapoor was arrested on October 26th, after he was indicted on an array of federal charges, including racketeering, conspiracy to commit mail fraud, conspiracy to commit wire fraud, and conspiracy to violate an anti-kickback statute.

Federal prosecutors allege that Kapoor and six former Insys executives conspired to bribe and pay kickbacks, including “speaker fees and honoraria for marketing events, food and entertainment” to doctors who wrote a large number of Subsys prescriptions, often for patients who did not have cancer.

Kapoor and the six executives have also been accused of conspiring to mislead and defraud health insurance providers who were reluctant to approve payment for the Subsys when it was prescribed for non-cancer patients.

The alleged scheme involved pharmacies and pain management clinics and practitioners from Saginaw, Michigan, to southwest Florida and Laredo, Texas.

“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 United States Attorney William D. Weinreb said in a statement announcing the charges against Kapoor. “Today’s arrest and charges reflect our ongoing efforts to attack the opioid crisis from all angles. We must hold the industry and its leadership accountable – just as we would the cartels or a street-level drug dealer.”

Kapoor was once ranked as one of the 7 wealthiest individuals in Arizona.  But according to the Associated Press, his net worth has fallen from $2.4 billion to about $1.75 billion amid Insys’s legal woes.

Insys Sets Aside $150 Million In Connection with Federal Probe

Following his arrest last Thursday, Kapoor appeared before Judge Michelle Burns in U.S. District Court in Phoenix. He posted $1 million bail, but was ordered to wear an electronic monitoring device and remain in the Maricopa area until his scheduled arraignment in Boston on November 16^th.

Kapoor resigned his seat on the Insys board over the weekend.

On Friday, Insys announced it was cooperating with the Department of Justice and had set aside $150 million for a possible settlement.

“This estimate reflects a minimum exposure at which management has determined a willingness to settle these matters,” the company said in a statement.  “The DOJ has not accepted management’s offer, and there can be no assurance that future discussions with the government to resolve these matters will be successful, that the approvals we need will be obtained or that any potential settlement will be agreed to on terms and conditions acceptable to us or the DOJ,”