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Insys Founder John Kapoor Faces a Stiff Prison Sentence for His Role in Opioid Kickback Scheme

John Kapoor played a key role in a doctor kickback scheme to boost prescriptions of Subsys (fentanyl) sublingual spray.

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John Kapoor, the founder and former CEO of Insys Therapeutics, has been sentenced to five and a half years in prison for playing a key role in an opioid kickback scheme to boost the sales of Subsys, which is a sublingual (under-the-tongue) fentanyl spray.

Although the prosecutor recommended a term of 15 years in prison, a federal judge in Boston sentenced Kapoor 66 months in prison, which still represents the stiffest penalty for a leading executive in the opioid industry while the nation is suffering from the ongoing opioid epidemic.

In May, Kapoor was convicted on felony and fraud charges in a scheme that directs Insys sales reps to entice physicians to prescribe Subsys via an elaborate series of kickbacks.

The Insys scheme included visits to strip clubs, “lavish” dining, entertainment outings, and even jobs affairs for relatives and friends of people who prescribed the drug.

In November, a federal judge vacated the racketeering portion of Kapoor’s sentence. The judge argued that prosecutors did not present enough evidence suggesting Kapoor and three former Insys sales executives intended for Subsys prescription to patients for nonmedical purposes.

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Apart from Kapoor, Alec Burkaloff, the leading manager in that scheme, was sentenced to 26 months after pleading guilty in 2018. Burkaloff had a key role in the sales of Subsys through a video that was shown during the trial.

Michael Babich, another former CEO of Insys, was also sentenced to 30 months in prison after accepting to cooperate with the federals in exchange for a lesser charge.

Sunrise Lee, the former Insys sales executive, who was sentenced a year-and-day in prison, accused the company of “sexist” hiring practices in taking on former exotic dancers to entice “lonely overworked” physicians to prescribe Subsys.

In addition, three other sales executives of Insys, Michael Gurry, Richard Simon, and Joseph Rowan, were sentenced to 33 months in prison for roles in the effort.

In September, the company won a bankruptcy court’s approval to divert Subsys to BTcP Pharma LLC. The deal was expected to net Insys $20 million in royalties.

“Six state attorneys general at the time opposed the sale of Subsys for fear that the new buyer would market the spray in much the same way Insys did,” according to Reuters. Eventually, the states withdrew their opposition after Michael Burke, BTcP owner, pledged to restrict the drug’s marketing to cancer patients.

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