03 May ‘Game-changer’ – CEO of fentanyl company found guilty of RICO – News – The Palm Beach Post
No longer will pharmaceutical companies fear paying only a cost-of-doing business fine for illegally pushing their opioid medications onto an unsuspecting public. Now the executives may face serious prison time after Thursday’s racketeering verdict against John Kapoor, the founder of a company who bribed doctors to amp up their prescribing of a potent fentanyl spray.
“It’s amazing. It is highly unusual to actually go after a CEO of a pharmaceutical company, but I certainly hope that it will send a signal to other CEOs of companies that are involved in illegally marketing of drugs,” said Dr. Adriane Fugh-Berman, a professor of pharmacology at Georgetown University Medical Center and director of PharmedOut, which aims to educate doctors on the marketing practices of drug companies like Insys.
The Palm Beach Post reported a year ago that Insys Therapeutics hatched part of its plan in South Florida to entice doctors to prescribe its dangerous medication, Subsys. The company paid Florida physicians more than $2.1 million between August 2013 through 2015 through what prosecutors say was a sham promotional speakers program, according to a Post analysis of Medicare data. No doctors in Florida have been charged in connection with Insys.
The Post’s investigation, “Pay to Prescribe: The Fentanyl Scandal,” reported on the devastation caused by the Insys marketing ruse that netted the company $650 million in revenue. The Post found Insys reported 908 Subsys-related deaths to the Food & Drug Administration from 2012 to 2017, possibly collateral damage while it racked up sales.
At the center of it all was Alec Burlakoff, a former Boca Raton high school counselor who made the jump into pharmaceuticals. His goal as Insys’ vice president of sales was to transform the culture into one resembling his favorite movie, “The Wolf of Wall Street.”
Strippers and models
Burlakoff called the movie about machismo capitalism run amok “the best training video in history,” court documents attest. He hired strippers, cocktail waitresses and models to target doctors for a bogus speaking program. He dressed up as giant bottle of Subsys for a surreal rap video to encourage sales reps at a company conference to get doctors to put patients on the highest dose possible.
The mastermind of Insys’ scheme pleaded guilty in November and was a star witness in the 10-week trial in Boston.
“Pill mills, for us, meant dollars,” Burlakoff testified.
After 15 days of deliberations, the jury’s verdict found Kapoor guilty of a racketeering conspiracy that drove sales while contributing to a nationwide opioid epidemic.
Also found guilty was former Vice President Michael Gurry, ex-national sales director Richard Simon, former regional sales director Joseph Rowan, and sales manager Sunrise Lee.
Lee was the stripper that Burlakoff recruited and, according to court documents, was his “closer” for doctors on the fence about getting involved in Insys schemes. Lee once danced at Rachel’s Gentlemen’s Club in West Palm Beach, according to news reports.
“We were expecting a different result,” said her lawyer, Peter Horstmann. Lee, a single mother of two young children, was near tears as her mother hugged her after court.
“Today’s convictions mark the first successful prosecution of top pharmaceutical executives for crimes related to the illicit marketing and prescribing of opioids,” said Andrew E. Lelling, U.S. attorney for Massachusetts.
“Just as we would street-level drug dealers, we will hold pharmaceutical executives responsible for fueling the opioid epidemic by recklessly and illegally distributing these drugs, especially while conspiring to commit racketeering along the way.”
The verdict gave some solace for patients who became unwittingly addicted to Subsys and the families who lost loved ones to the fentanyl spray.
“Today was a tremendous victory for the victims and their families today will hopefully mark a turning point in the country,” said Jeff Buchalter, an Iraq War veteran who ended up addicted to Subsys. “Whether you are small-town physician or a corporate CEO of a multibillion-dollar company, you can no longer hide behind your wealth, your connections or K Street.”
Buchhalter is living in a New Jersey homeless shelter. His attorney, Aaron Moore, of Baltimore, thanked the jury on behalf of all victims.
Richard Hollawell said his client, Deborah Fuller, called him almost daily as the jury was deliberating. The New Jersey woman lost her 32-year-old daughter after a doctor put her on the fentanyl spray even after they told the physician not to put her on an opioid.
“It’s a game-changer,” he said. “A message has been sent we are not going to tolerate improper behavior in the marketing of dangerous drugs … and first and foremost and most important thing that came from today. It’s long overdue.”
Cause of death: ‘Corporate greed’
Deborah Fuller testified at a congressional hearing on Insys in September 2017, saying, “I believe that Sarah’s death certificate should be changed to indicate her death was a homicide, and the cause of death should be corporate greed.
Kapoor is the first chief executive officer of an opioid maker to be convicted at a trial. The verdict comes as thousands of state and local governments press civil lawsuits against drugmakers to recover billions of dollars spent combating the epidemic. He faces a maximum prison sentence of 20 years.
Companies including Teva Pharmaceutical Industries, Purdue Pharma, Johnson & Johnson and Endo International are preparing to face trials over allegations by state and local governments that their sales campaigns fueled a crisis.
Meanwhile, efforts to use the legal system to hold executives accountable for an epidemic that claims more than 100 Americans’ lives daily are gaining speed. The Sackler family, Purdue’s billionaire owners, is facing a new wave of lawsuits over its role in the marketing of OxyContin. They, like the other companies, deny wrongdoing.
Purdue Pharma and its executives paid $645 million in 2007 to settle federal claims it misled the public on the medication’s risk of addiction. The pharmaceutical giant’s CEO, chief medical officer and lawyer were found liable for the settlement but never were prosecuted criminally.
Cephalon, a fentanyl competitor, paid $425 million to settle claims against it marketing programs. Burlakoff also worked at Cephalon.
The Chandler, Arizona-based Insys saw its shares fall 1.7 percent Thursday to $4.15 in New York trading, a shadow of what it was when the bribery scheme was in place. Insys reached a valuation of $3.2 billion in July 2015, almost 10 times higher than its current one.
At the trial, some of the government’s 39 witnesses offered racy testimony about how the company lured doctors into writing more Subsys prescriptions with sexy sales reps, lap dances and lavish dinners at restaurants that Kapoor owned.
The defense painted the government’s witnesses as the real villains, saying it was Burlakoff who came up with the idea of shoveling money to doctors while keeping that information away from Kapoor.
Hollawell, the Fuller family’s attorney, said he always had faith in the jury to make the right decision.
“It’s a good day,” he said. “Unfortunately it should have happened sooner with other companies and executives and many lives could have been saved. Had this avenue been taken instead of dishing out drop-in-bucket fines.”
Bloomberg News Service contributed to this story.