Millions of Americans who lived through the financial crisis probably recall that not a single executive of a major investment bank was jailed in the aftermath, despite running organizations seemingly dedicated to perpetuating a criminal fraud on nearly every counterparty and client.
But when Americans look back at the opioid crisis, they’ll remember that at least one executive of a major opioid manufacturer and distributor was sentenced to a fairly weighty sentence – five-and-a-half years (66 months) in federal prison – for an illegal kickback scheme that effectively involved bribing doctors to prescribe potentially lethal doses of fentanyl. That’s right: Packaged under the name brand Subsys, Insys sold a painkiller made from the same ultra-powerful synthetic opioid responsible for tens of thousands of deaths across America.
According to the FT, which, in partnership with PBS’s Frontline, is producing a documentary on the opioid crisis, John Kapoor, the founder of Insys, was sentenced to prison time on Thursday after being prosecuted under the RICO act – a law adopted decades ago to help the DoJ prosecute the mafia.
Kapoor joins seven other Insys executives who have already received jail time for their role in the company’s illegal shenanigans, which included uses “ruthless” sales tactics to encourage doctors to prescribe more of their drug. Several doctors who took money from the company in exchange for kickbacks transparently disguised as speaking fees are also either being prosecuted, or have already been sentenced to jail time.
Earlier on Thursday, Alec Burlakoff, Insys’s former head of sales and one of the government’s key cooperating witnesses accepted a sentence of 26 months in prison. The jail sentences were handed down despite a long tradition of allowing big pharma to skate by with fines that often amounted to a slap on the wrist.
Subsys was approved by the FDA to target so-called “breakthrough pain”, something experienced by many patients with advanced cancer. But most of the doctors Insys targeted weren’t oncologists. The company encouraged them to prescribe the drug “off label” – meaning not for its approved purpose – to treat normal chronic pain.
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Kapoor is a serial entrepreneur who immigrated to the US from India in his early 20s. The fentanyl spray that was the company’s main product was approved in 2012.
Under the company’s kick-back scheme, doctors who prescribed large quantities of the drug could earn up to $125,000 a year in speaking fees.
The company depended on sales associates whom Kapoor described as “PHD” – “poor, hungry and desperate” or “poor, hungry and dumb.” One of the sales reps who got mixed up in the prosecution was a former stripper, a detail from the investigation that was widely covered in the press.
Kapoor’s insistence that the company meticulously track the ROI from its illegal kickback scheme is what eventually did him in. Prosecutors managed to get their hands on a spreadsheet calculating the return on investment for every dollar spent on doctor “honorariums”. Kapoor insisted that, for every dollar a doctor received, they must bring in at least $2 in sales for Insys.
Kapoor’s legal team insisted that their client was unfairly portrayed as a “caricature of a mob boss” by the prosecution. But the firm’s “callous culture” was exemplified by a sales video featuring a “rapping bottle of Subsys” encouraging doctors to raise the dose for their patient’s – effectively encouraging them to accidentally overdose and kill their own patients.
Burlakoff, who played the rapping Subsys bottle in the video, told the press that the video was a big part of the incriminating evidence against him. He now regrets participating in it, even though he thought it was ‘cool’ at the time.
Fred Wyshak, the prosecutor who handled the Insys case, gained notoriety for prosecuting the mob, and having a hand in the conviction of Whitey Bulger, the former Boston crime boss who was murdered while serving a life sentence last year.
By Tyler Durden of Zero Hedge.
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