With federal prosecutors laying waste to Insys’ executive team, one big domino was still left to fall: Founder and former CEO John Kapoor, who had a leading role in the drugmaker’s opioid kickback scheme. Now, Kapoor will face a stiff prison sentence that sets the bar for executives in the opioid industry.
A federal judge in Boston sentenced Kapoor on Thursday to five and a half years in prison for his role in a doctor kickback scheme to boost subscriptions of Subsys, an under-the-tongue fentanyl spray.
The 66-month sentence is far less than the prosecutor-recommended term of 15 years in prison but still represents the stiffest penalty a leading executive at an opioid maker has faced for a role in the nation’s addiction epidemic.
Kapoor was convicted in May on federal racketeering and mail and wire fraud charges in a companywide scheme in which Insys sales reps were directed to entice doctors to prescribe Subsys through an elaborate series of kickbacks. The plan included visits to strip clubs, “lavish” dining and entertainment outings, and jobs for relatives and friends of people who prescribed Subsys.
A federal judge in November vacated the racketeering portion of Kapoor’s sentence, arguing prosecutors had not presented evidence showing Kapoor and three former Insys sales executives intended for under-the-tongue fentanyl spray Subsys to be prescribed to patients for nonmedical purposes.
Also on Thursday, one of the leading managers in that effort, VP of sales Alec Burkaloff, was sentenced to 26 months after pleading guilty in late 2018 to a lesser charge in exchange for his cooperation with federal prosecutors. Burkaloff took a leading role in an internal sales video, shown during trial, in which sales executives rap about courting physicians and capitalizing on opioid titration, or boosted dosages for patients who develop a tolerance to the drug.
Another former CEO, Michael Babich, was sentenced to 30 months in prison Wednesday after also agreeing to cooperate with the feds in exchange for a lesser charge.
Earlier this week, former Insys sales exec Sunrise Lee, who received a year-and-day sentence Wednesday, accused her former company of sexist hiring practices in taking on former exotic dancers to entice “lonely overworked” physicians to prescribe Subsys. In what her lawyers deemed a “pharmaceutical dystopia,” Lee was encouraged to “smile and close” her sales.
Three other sales executives––Michael Gurry, Richard Simon and Joseph Rowan––were all sentenced to 33-month terms for their roles in the scheme.
Kapoor’s sentence largely closes the books on the federal probe into Insys’ executive team as the drugmaker wraps up the process of its court-supervised bankruptcy.
After a $225 million settlement with the Department of Justice in June, Insys agreed to restructure and divest its products within 90 days of filing Chapter 11 bankruptcy. In its first sale after that announcement, Hikma Pharmaceuticals snapped up unit-dose nasal and sublingual spray manufacturing equipment as well as pipeline products of epinephrine and naloxone nasal sprays in a $12 million deal. Naloxone spray is used to counteract opioid overdoses.
In September, Insys won a bankruptcy court’s approval to hive off Subsys to Wyoming-based BTcP Pharma LLC, part of the MMB Healthcare network. The deal was expected to net Insys $20 million in royalties.
Six state attorneys general at the time opposed the sale of Subsys for fear that the new buyer would market the spray in much the same way Insys did, according to Reuters. The states eventually withdrew their opposition after BTcP owner Michael Burke pledged to restrict the drug’s marketing to cancer patients.