John Kapoor, Billionaire and Founder of Insys, arrested in alleged opioid scheme

On the same day President Trump declared the opioid epidemic a public health emergency, the co-founder of a prominent opioid medication manufacturer has been arrested on fraud and racketeering charges. John Kapoor, former CEO of Insys Therapeutics, has been charged with conspiring to push the company’s signature drug for unacceptable uses through a series of bribes and kickbacks.

Subsys, as the drug is known, transmits the extremely powerful narcotic fentanyl in spray form, allowing it to be placed beneath the tongue for fast, potent pain relief. It is meant only for treating cancer patients suffering from severe pain.

But according to prosecutors, Kapoor and several other former high-ranking executives at the company conspired to bribe doctors to write “large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer.” They also allegedly “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.”

Kapoor, 74, of Phoenix, Ariz., was 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, the attorney’s office said in a news release.

The entrepreneur, who currently serves as a board member at Insys, was charged with RICO conspiracy, conspiracy to commit mail and wire fraud, and conspiracy to violate the Anti-Kickback Law. He was scheduled to appear in federal court in Phoenix Oct. 26 and then at the U.S. District Court in Boston, Mass., at an unspecified date in the future.

Six other former Insys executives and managers had allegations levied against them, all of whom were indicted in December last year. “The medication, called ‘Subsys,’ is a powerful narcotic intended to treat cancer patients suffering intense breakthrough pain,” the attorney’s office statement read. “In exchange for bribes and kickbacks, the practitioners wrote large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer,” it added.

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, doing so by setting up a “reimbursement unit,” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers, the attorney’s office said. An attorney for Kapoor told CBS News that Kapoor “is innocent of these charges and intends to fight the charges vigorously.”

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