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Pharmaceutical Executive John Kapoor Sentenced To 66 Months In Prison In Opioid Trial

Jan 23, 2020
Originally published on January 24, 2020 9:24 am

Updated at 5:30 p.m. ET

Former billionaire and pharmaceutical executive John Kapoor has been sentenced to five years and six months in prison. His sentencing is the culmination of a months-long criminal trial in Boston's Moakley U.S. Courthouse that resulted in the first successful prosecution of pharmaceutical executives tied to the opioid epidemic.

The 76-year-old is the founder of Insys Therapeutics, which made and aggressively marketed the potent opioid painkiller Subsys.

Kapoor's 66-month prison term is substantially less than the 15-year sentence recommended by federal prosecutors, but it is more than the one year requested by Kapoor's defense attorneys, who maintained the executive's innocence and stressed his old age as reason for a short prison sentence.

U.S. District Judge Allison Burroughs explained that she reached the lesser sentence after considering Kapoor's advanced age and philanthropy, as well as "his central role in the crime," The Associated Press reported.

Kapoor and four other executives were found guilty last year of orchestrating a criminal conspiracy to bribe doctors to prescribe the company's medication, including to patients who didn't need it. They then lied to insurance companies to make sure the costly oral fentanyl spray was covered.

The painkiller, which was intended for cancer patients, could cost as much as $19,000 a month.

Two other executives pleaded guilty and became cooperating witnesses.

The other executives received between one year and 33 months, significantly less than many of the prison terms recommended by the federal prosecutors.

Earlier on Thursday, Insys sales chief Alec Burlakoff was sentenced to 26 months in prison for his role in the bribery and fraud scheme.

"This was an offense of greed," Burroughs said before sentencing Burlakoff.

The sales executive hired a stripper as a Subsys sales representative to help persuade doctors to boost prescriptions. The woman, named Sunrise Lee, eventually was promoted to oversee a third of the company's sales force.

"I didn't think of who we were at Insys and how unethical what we were doing was," he told the judge on Thursday, according to Bloomberg. "The only thing I could think was how could I keep up with the fast and furious pace necessary to get ahead."

For the federal government, this was a landmark trial in which corporate executives were charged under the Racketeer Influenced and Corrupt Organizations Act, or RICO, a charge often reserved for mob bosses and drug lords. Experts saw the trial as sending a message to drug companies that they will be held criminally accountable for their alleged role in fueling the opioid crisis.

"I think this is just the tip of the iceberg," said Brad Bailey, a former federal prosecutor and current defense attorney who has been following the Insys trial closely. "It's a template that prosecutors will continue to use."

While these seven Insys executives have been in court and awaiting sentencing, the company entered into an agreement with the government to settle criminal and civil investigations. Insys agreed to pay $225 million and admitted to the kickback scheme. Shortly after the agreement was announced, the company filed for bankruptcy.

Bailey said that between the prison sentences and the company's financial woes, "there's no question that this was a cautionary tale to all executives."

Ameet Sarpatwari, a physician and the assistant director of Harvard University's Program on Regulation, Therapeutics, and Law, thinks this trial will have a chilling effect on the pharmaceutical industry.

"It's an important warning to other pharmaceutical manufacturers and executives who may be considering pushing their products through aggressive, and possibly legally dubious, marketing schemes," said Sarpatwari. "The consequences for such actions may not simply be fines — which has historically simply been the cost of doing business — but possibly jail time."

However, he said, this successful prosecution does not mean the practices that contributed to overprescribing and addiction to opioids will go away.

"A lot of the activities that you see within the industry that are effective are technically legal. And so, if that's the case, is this going to curb those aggressive tactics? No, but it will give second thought to pushing the boundaries," said Sarpatwari. "I think that is going to be the hopefully helpful fallout of the case."

: 1/22/20

An earlier version of this story misspelled Alec Burlakoff's last name as Burkaloff on first mention.

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DAVID GREENE, HOST:

Yesterday afternoon, pharmaceutical executive and former billionaire John Kapoor was sentenced to 5 1/2 years in prison. Six other executives at the company he founded, Insys Therapeutics, also face prison terms for orchestrating a nationwide bribery scheme. This is the first time high-ranking drug company executives tied to the opioid epidemic are being sent behind bars. Gabrielle Emanuel of member station WGBH in Boston reports.

GABRIELLE EMANUEL, BYLINE: Insys Therapeutics developed a strong opioid painkiller for cancer patients, and then they set out to aggressively market it.

(SOUNDBITE OF ARCHIVED RECORDING)

ANDREW LELLING: Out of pure greed, Insys executives, from John Kapoor on down, bribed doctors to prescribe this powerful, addictive drug to people who did not need it.

EMANUEL: U.S. Attorney Andrew Lelling spoke outside the courthouse after the sentencing. Through the months-long trial, his office detailed how Insys paid doctors to write lots of prescriptions for their opioid, often at the highest dose possible. Patients got addicted and kept using their medication. Then Insys systematically lied to insurance companies, often pretending patients had a cancer diagnosis when they didn't. This was to ensure their drug, which could cost nearly $20,000 a month, was paid for.

(SOUNDBITE OF ARCHIVED RECORDING)

LELLING: All so they can make millions of dollars at the expense of patients.

EMANUEL: Federal prosecutors painted a picture of a corrupt company where one executive on trial even gave a lap dance to a doctor to convince him to prescribe the drug and where Insys sales representatives made a music video about getting patients hooked.

(SOUNDBITE OF SONG, "GREAT BY CHOICE")

Z REAL AND A BEAN: (Rapping) I got new patients, and I got a lot of them. If you want to be great, listen to my voice. You can be great, but it's your choice.

EMANUEL: In a rare move, the government charged the Insys executives criminally with racketeering, something usually reserved for mob bosses and drug lords, not corporate executives. Kapoor's defense attorneys maintained his innocence and said he was unaware of how others in the company were acting. But the jury returned guilty verdicts for all the executives. U.S. Attorney Andrew Lelling.

(SOUNDBITE OF ARCHIVED RECORDING)

LELLING: This was a landmark case in the government's effort to fight the opioid crisis.

EMANUEL: Still, federal judge Allison Burroughs overturned part of the jury's guilty verdict. And she gave the defendants just a fraction of the prison sentences the government sought. Kapoor, for example, received 5 1/2 years instead of 15 years.

BRAD BAILEY: That's still a very long prison sentence for a business person.

EMANUEL: Brad Bailey is a defense attorney and a former federal prosecutor who has been following the case closely. He says that the pharmaceutical industry sees this as a warning, both because executives will be serving time and because the company itself has struggled. Bailey expects more cases like this one.

BAILEY: I think this is just the tip of the iceberg.

EMANUEL: Even if there are more prosecutions, Harvard professor Ameet Sarpatwari says he expects many of the practices that led to overprescribing opioids and to addiction to continue.

AMEET SARPATWARI: A lot of the activities that you see within the industry that are effective are technically legal.

EMANUEL: He hopes the case will make other drug company executives reconsider pushing the legal boundaries.

For NPR News, I'm Gabrielle Emanuel in Boston.

(SOUNDBITE OF EZRA COLLECTIVE'S "QUEST FOR COIN") Transcript provided by NPR, Copyright NPR.