John Kapoor, the billionaire founder of the Arizona-based drug company Insys Therapeutics Inc., pleaded not guilty to charges he participated in a scheme to pay kickbacks to doctors to push sales of the company’s potent fentanyl spray, Subsys.
Last month, Kapoor resigned from the company’s board of directors following the resignation of Insys’s majority shareholder and chief executive officer, who was charged with engaging in conspiracies to commit racketeering, mail fraud and wire fraud. Board member Patrick Fourteau also resigned citing personal reasons. Six former Insys executives and managers face similar charges – Michael Babich, Alec Burlakoff, Michael J. Gurry, Richard M. Simon, Sunrise Lee, and Joseph A. Rowan.
The case focuses on Subsys, an under-the-tongue spray whose only indication is for breakthrough pain in cancer patients. Insys is accused of paying doctors to prescribe the drug for other indications, and conning insurance companies into thinking the medication was for breakthrough cancer pain when in fact it was being prescribed for other conditions like back pain.
At the time of Kapoor’s arrest and resignation, the board had recorded $150 million as its best estimate for the minimum amount it would pay to settle the U.S. Department of Justice investigation. Kapoor was released on a $1 million bond.
The Insys investigation comes while the U.S. is in the throes of a nationwide opioid epidemic. Earlier this month, President Trump declared the opioid epidemic a public health emergency.