The billionaire founder of Insys Therapeutics Inc, John Kapoor, has resigned from the company’s board of directors, Insys said in a statement on Sunday after he was arrested on Thursday on 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.
The founder and majority owner of Insys Therapeutics Inc., was arrested and charged with leading a nationwide conspiracy to profit by using bribes and fraud to cause the illegal distribution of a Fentanyl spray intended for cancer patients experiencing breakthrough pain.
John N. Kapoor, 74, of Phoenix, Ariz., a former member of the Board of Directors of Insys, was arrested in Arizona and charged with RICO conspiracy, as well as other felonies, including conspiracy to commit mail and wire fraud and conspiracy to violate the Anti-Kickback Law.
The superseding indictment also includes additional allegations against several former Insys executives and managers who were initially indicted in December 2016.
The superseding indictment charges that Kapoor and other company officials conspired to bribe practitioners in various states, many of whom operated pain clinics, in order to get them to prescribe a fentanyl-based pain medication.
The medication, called “Subsys,” is a powerful narcotic intended to treat cancer patients suffering intense breakthrough pain. Prosecutors allege that the practitioners wrote large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer, In exchange for bribes and kickbacks,
The indictment also alleges that Kapoor and the six former executives conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients. They achieved this goal by setting up the “reimbursement unit,” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers.
“As alleged, these executives created a corporate culture at Insys that utilized deception and bribery as an acceptable business practice, deceiving patients, and conspiring with doctors and insurers,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division.
The charges of conspiracy to commit RICO and conspiracy to commit mail and wire fraud each provide for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000, or twice the amount of pecuniary gain or loss. The charges of conspiracy to violate the Anti-Kickback Law provide for a sentence of no greater than five years in prison, three years of supervised release and a $25,000 fine. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.