Litigation and bankruptcy
In December 2016, seven former executives and managers employed by Insys were taken into custody, including CEO John Kapoor and charged with conspiracy to bribe medical staff in several states to prescribe a specific pain medication to their patients.[18] The accusations were the topic of an NBC special feature report on Megyn Kelly's Sunday Night on June 4, 2017.[19]
In August 2017, Insys Therapeutics was sued by Arizona Attorney General Mark Brnovich for misleading patients and doctors about the dangers of the drug Subsys, and for lying to insurers about the condition of the patients in a bid to get payment for the drug. He said the firm deceived insurers and pharmaceutical benefit companies into agreeing to pay for the expensive drug by misleading them to believe that the payment request was coming from a doctor's office and not the company making the drug. Brnovich also said those Insys employees misrepresented the medical conditions of the patients, lying that they had breakthrough pain, lying that the patients had tried other medications, and lying that the patients needed the sublingual spray rather than less expensive pills marketed by other firms because they had difficulty swallowing.[20] Insys Therapeutics issued a response to the Arizona filing on their website, stating, in part, that "[t]he allegations contained in the Arizona Attorney General's complaint relate to former employees and physicians that are no longer associated with our Company or our speaker bureau."[21]
In October 2017, Insys founder John Kapoor was arrested in Arizona and charged with RICO conspiracy, conspiracy to commit wire fraud, and conspiracy to violate the anti-kickback law related to Insys' effort to secure prescriptions of Subsys. Kapoor is also alleged to have conspired to defraud health insurance providers.[22]
In December 2018, former Insys CEO Michael Babich agreed to plead guilty to one count of conspiracy and one count of mail fraud, in connection to bribes paid to doctors and their assistants.[23][24] In April 2019, Alec Burlakoff, the former vice president of sales for Insys, agreed to pay the State of Arizona $9.5 million in a civil settlement with Attorney General Mark Brnovich for his role in the alleged bribery campaign of doctors to prescribe Insys products to patients.[25] Brnovich had accused Burlakoff of operating a program that paid doctors lucrative "speaking fees" in order to encourage them to prescribe more Subsys, Insys' fentanyl-based pain medication.[26] Burlakoff is required to pay the state $5.2 million from the proceeds he made from the operation, as well as $4.3 million in civil penalties. As part of the settlement, Burlakoff agreed to testify against Insys in ongoing litigation and will be permanently banned from advertising or selling any pharmaceutical drugs in Arizona.[25]
On May 2, 2019, a federal jury found top executives of Insys Therapeutics guilty of racketeering charges. The jury, after deliberating for 15 days, issued guilty verdicts against the company's founder, the one-time billionaire John Kapoor, and four former executives, finding they had conspired to fuel sales of its highly potent drug, Subsys, by not only bribing doctors to prescribe its product but also by misleading insurers about patients' need for the drug.[4][27] Other Insys employees also found guilty included Richard M. Simon, former national director of sales; Sunrise Lee, regional sales director; Joseph A. Rowan, regional sales director; and Michael J. Gurry, former vice president of managed markets.[28] In June 2019, Insys Therapeutics agreed to pay $225 million to settle the federal government's criminal and civil investigations into the company's marketing practices.[29] In January 2020, Kapoor was sentenced by a federal court to five and a half years in prison.[30]
Insys filed for bankruptcy in Delaware Bankruptcy Court on June 10, 2019. Andrew Long, the company's CEO, claimed the company was struggling due to extensive litigation and declining revenues relating to its Subsys product. The bankruptcy filing came just 10 days after the company reached a settlement with the U.S. Justice Department. The U.S. government agreed to accept an unsecured claim of $190 million in the case.[31][32]
