Kapoor Opioid

John Kapoor-led Insys Therapeutics June 5 agreed to pay $225 million to settle a case in which it was alleged to have paid kickbacks and use illegal marketing tactics to sell a fentanyl spray. Five days later, June 10, the firm filed for Chapter 11 bankruptcy. (Insys photo)

WASHINGTON – An opioid manufacturer has agreed to pay $225 million to resolve federal investigations into allegations that it paid kickbacks and used other illegal marketing tactics to sell a powerful fentanyl spray, authorities said June 5.

The settlement stems from criminal and civil probes into Insys Therapeutics Inc.'s scheme to pay doctors in exchange for prescriptions of the drug meant for cancer patients with severe pain.

It comes a month after Insys’ Indian American founder John Kapoor and four other former executives of the Chandler, Arizona-based company were convicted of bribing doctors across the country to prescribe the drug known as Susbys.

“For years, Insys engaged in prolonged, illegal conduct that prioritized its profits over the health of the thousands of patients who relied on it,” Massachusetts U.S. Attorney Andrew Lelling said in an emailed statement. “Today, the company is being held responsible for that and for its role in fueling the opioid epidemic,” he said.

Representatives for Insys Therapeutics did not immediately respond to a request for comment.

Authorities have held Insys up as an example of their efforts to target those responsible for driving the drug crisis.

Opioid overdoses claimed nearly 400,000 lives in the U.S. between 1999 and 2017, according to the Centers for Disease Control and Prevention. An estimated 2 million people are addicted to the drugs, which include both prescription painkillers such as OxyContin and illegal drugs such as heroin.

As part of the agreement, Insys will enter into a five-year deferred prosecution agreement with the U.S. Justice Department and its operating subsidiary will plead guilty to five counts of mail fraud, authorities said.

The company has agreed to pay a criminal fine of $2 million and forfeit $28 million. It will also pay $195 million to settle civil allegations, prosecutors said.

Prosecutors say top Insys executives put patients at risk in order to boost sales for Subsys by paying doctors bribes and kickbacks in the form of speaker fees for programs billed as educational opportunities for other doctors. In reality, prosecutors say, the events were mainly social gatherings for doctors and their friends to enjoy a fancy meal.

“Paying bribes and providing other incentives to prescribe opioids with little regard to patient welfare surely signals a company is more concerned with profits than patients,” Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, said in a statement.

Kapoor and four other former Insys executives were found guilty of racketeering conspiracy charges after a lengthy trial in Boston that exposed such marketing tactics as using a stripper-turned-sales-rep to give a doctor a lap dance (see India-West article here: https://bit.ly/31iu8LJ).

The charge calls for up to 20 years in prison.

Kapoor, 76, and the others denied all wrongdoing.

An attorney for Kapoor said after the verdict that they would “continue the fight to clear Dr. Kapoor's name.” His lawyers argued that the prosecutors were unfairly blaming the drug crisis on Insys as Subsys makes up a small fraction of the prescription opioid market.

The company said after the executives' convictions that the “the actions of a select few former employees” are not indicative of the company's work today.

NPR adds: Insys June 10 filed for Chapter 11 bankruptcy protection, just five days after agreeing to pay $225 million to settle the federal government's criminal and civil cases against the company for bribing doctors to prescribe its fentanyl-based painkiller.

In documents filed June 10, Insys asked the court to allow it to sell its assets to pay more than $250 million in debts. But the move also means the government may not collect all the settlement money it is due, NPR said.

"After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximize the value of our assets and address our legacy legal challenges in a fair and transparent manner," Insys CEO Andrew G. Long said in an emailed statement, according to the NPR report.

It is the first time a drugmaker has sought bankruptcy protection due to legal action related to the opioid crisis. Under Chapter 11 protection, the company will be able to keep operating — paying employees and vendors — as they devise a plan to pay mounting legal expenses, including more than $11 million spent to defend Kapoor against criminal charges by the government, according to court papers, the NPR report added.

The bankruptcy filing also comes on the heels of a guilty plea by Insys last week to five counts of mail fraud and the admission that it bribed doctors to boost sales of the powerful and highly addictive opioid, Subsys, it said.

The sublingual spray was developed as a pain management drug for adult cancer patients who are already tolerant to around-the-clock opioid therapy.

In bankruptcy, the government will become one more of the company's creditors. It is unclear how much of the $195 million in the civil settlement that was reached last week the government will collect.

However, the company will remain liable for the $28 million forfeiture amount outlined in the criminal settlement regardless of Chapter 11 protection, a spokeswoman for Boston's U.S. Attorney's Office told NPR.

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