State, Federal Settlements In Insys Therapeutics Opioid Fraud Scheme

By Heather van Blokland
Published: Saturday, July 4, 2020 - 11:30am
Updated: Saturday, July 4, 2020 - 11:35am

The founder of opioid-maker Insys Therapeutics has agreed to a settlement to resolve allegations he helped conceal from investors a scheme to bribe doctors and defraud insurance companies to overprescribe the company's signature drug, Subsys.

John Kapoor is the drugmaker’s former chairman and onetime chief executive. In papers filed on Wednesday in federal court in Phoenix, the settlement resolves securities fraud class action claims against him and will be at least $700,000 and up to $10 million. It comes days after the company's former CEO, Michael Babich, settled with the Arizona Attorney General’s Office for $2 million for his part in the related state case.

Subsys is a spray form of fentanyl, a powerful opioid several times more powerful than morphine and was FDA-approved only for cancer patients with extreme cases of breakthrough pain.

Insys and its executives were accused of working with doctors to submit falsified patient records to say the patients had cancer when they did not and to prescribe additional doses to charge more fees for the drug.

Earlier this year, Babich was sentenced to two and a half years in federal prison. The company’s founder, John Kapoor, was sentenced to 66 months, also in the federal case.

The Arizona case is still ongoing.

“Insys and their executives must be held accountable for engaging in unethical and illegal behavior that helped fuel the opioid crisis in Arizona,” said Brnovich in a prepared statement last week. The Attorney General’s Office said it is still pursuing claims against other executives and some Arizona doctors accused in the scheme.

Brnovich has two ongoing civil cases against Insys, its former executives, and Arizona doctors accused of engaging in the fraudulent scheme.

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