Feds Arrest Pharma Company, Insys Founder in Arizona Amid Opioids Crisis

Opioids

ARIZONA -- Last year, several top Insys Therapeutics executives were arrested, but according to reports from Fierce Pharma and KJZZ local media in Arizona, John Kapoor, the company's founder has now also been arrested by federal law enforcement on charges of racketeering and other charges.

The 74-year-old is a billionaire and is accused of running a scheme that involved compensating doctors for writing prescriptions and for having a so-called reimbursement team that was specifically designed to get insurance coverage from insurance companies, helping his company, Insys, make more money selling Subsys, according to reports. Much of this stems from the company's off-label products and promotions of those products. As more people have become addicted to painkillers, the focus has been brought directly on the industry that both the FBI and DEA has publicly said is responsible for the public health crisis.

Kapoor, charged with racketeering, was also charged by the federal government with conspiracy to commit mail and wire fraud and conspiracy to violate the Anti-Kickback Law, according to a complaint filed in federal court against Kapoor. The Anti-Kickback Law was designed to protect the public against this type of alleged fraud, more specifically the kick backs offered to doctors who make more money pushing the industry's pills. Kapoor faces up to two decades in federal prison on just two of these charges alone. According to one report, former CEO Michael Babich and other executives allegedly involved in the scheme face the same charges. That group was reportedly arrested last December.

The FBI director told reporters that a culture was created in this corporate structure that allowed for deep levels of deception and bribery as commonplace business practice in a conspiracy that was wide reaching, impacting many and devastating lives. He said it was an "important step in holding pharmaceutical executives responsible for their part in the opioid crisis," according to the Fierce Pharma report.

A case was built from the bottom up in this case, all the way to management, over the course of several years. Now the company has new management and leadership and says it wants to do the right thing. Kapoor is reportedly worth almost $2 billion, an estimate pegged by Forbes. Several federal agencies, including Federal Bureau of Investigation (FBI), Health and Human Services (HHS), Drug Enforcement Agency (DEA), Food and Drug Administration (FDA) and several other organizations assisted in the investigation reportedly.

A Boston Grand Jury brought the case forward, according to KJZZ, a college radio station based in Maricopa County, Arizona. William Weinreb is acting U.S. attorney for Massachusetts, according to the KJZZ report.