Eight months after being found guilty of a racketeering conspiracy, five top executives of Insys Therapeutics are set to receive their sentences. The defendants, which include former Insys CEO John Kapoor, were found to have bribed doctors to push the company’s painkiller, Subsys, on patients, even when the drug wasn’t needed.
The case is notable for being the first time a pharmaceutical CEO has been convicted of racketeering related to opioids.
It could establish a precedent for prosecuting other pharmaceutical executives in the midst of what the United States government has deemed an crisis in the country.
What did the executives do?
Insys Therapeutics is a billion-dollar specialty pharmaceutical company founded by Kapoor in 1990. Its main drug is Subsys, a fentanyl-based spray designed for pain relief.
Alongside Kapoor, Michael Gurry and Richard Simon, Sunrise Lee and Joseph Rowan were found to have paid doctors to promote Subsys at marketing events and to their patients. Kapoor was accused of lying to insurance companies about patients’ need for Subsys.
According to the National Institute on Drug Abuse, Fentanyl, a synthetic opioid, is similar to morphine in its chemical makeup but is “50 to 100 times more potent,” and is therefore highly addictive. It is intended for severe pain or to relieve pain after surgery.
The 2019 trial took place over 10 weeks from January to April and required 15 days of before resulting in convictions for all five defendants. The case was brought in front of a jury by the office of the U.S. attorney for Massachusetts.
In addition to racketeering charges, the defendants were also charged with mail and wire fraud.
As The New York Times has reported, the conviction of the Insys executives likely represents the beginning of the U.S. government holding pharmaceutical companies culpable for their role in the spread of the opioid crisis in America.
In April 2019, federal prosecutors also charged Rochester Drug Cooperative, a major pharmaceutical distributor, and its CEO with drug trafficking. It was the first such charge against a pharmaceutical company. The company agreed to pay a $20 million penalty in return for a non-prosecution consent decree. It still faces civil lawsuits for its role in the opioid crisis.
The first Insys executive to receive a sentence was Michael Gurry, the former vice president of Managed Markets. He received a sentence of 33 months in prison and a fine of $3.6 million. He will also face three years of supervised release once his prison term is completed. The other four executives will likely be sentenced this week.
Prosecutors have singled out Kapoor as the CEO and asked that he be given a sentence of 15 years. In 2018, after five years on the Forbes Billionaire list, Kapoor dropped off the list, though he still remains a multimillionaire.
Two other Insys executives, Michael Babich and Alec Burlakoff, separately pleaded guilty to racketeering charges and will also be sentenced in January.
The U.S. opioid crisis
In Oct. 2017, the U.S. Department of Health & Human Services officially declared a crisis related to opioid abuse in America. This followed an executive order by President Donald Trump in March 2017 that created the President’s Commission on Combating Drug Addiction and the Opioid Crisis.
The Centers for Disease Control and Prevention have collected data on drug overdoses in America. The CDC’s most recent data found that more than 700,000 people died due to drug overdoses from 1999 to 2017. There were 70,000 drug-related deaths in 2017 alone, up from 52,000 in 2015 and 64,000 in 2016.
Of those overdoses, 68 percent “involved a prescription or illicit opioid,” according to the CDC.
The HHS says that pharmaceutical companies in the 1990s reassured healthcare providers that their opioid pain relievers were not addictive. As a result, doctors over-prescribed the drugs and addiction rates soared.
Other culprits in the opioid crisis include so-called “pill mills,” walk-in clinics that provide prescriptions for opioid painkillers with little oversight or diagnostic work. Such clinics started appearing in the 1990s but exploded in the early 2000s.
What is racketeering?
The charge of racketeering, which broadly refers to any organized scheme to conduct illegal activity, is not usually associated with legitimate businesses, therefore, making this successful prosecution rare.
Racketeering is generally associated with organized crime. Racketeering charges, which can include kidnapping, murder, and bribery, have been used to get convictions against large mafia families.
The charge is covered by the Racketeer Influenced and Corrupt Organizations (RICO) Act, passed in 1970. The act was originally designed to prevent the “infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce,” according to the U.S. Department of Justice.