BOSTON — A federal jury on Thursday found the top executives of Insys Therapeutics, a company that sold a fentanyl-based painkiller, guilty of criminal racketeering charges involving bribing doctors to prescribe dangerous opioids to patients who didn’t need them.
The jury, after deliberating for 15 days, convicted the company’s founder, the onetime billionaire John Kapoor, of all charges in the case.
During the 10-week trial, federal prosecutors had detailed how Insys’s audacious marketing plan — which included paying doctors for sham educational talks and luring others with lap dances — sought to spur sales of its painkiller, Subsys, an under-the-tongue spray that was approved to treat patients with cancer.
Mr. Kapoor, 75, is one of the highest pharmaceutical executives in the country to be prosecuted on felony criminal charges in the opioids epidemic.
Company executives were accused of paying doctors to write prescriptions for a much wider pool of patients than the drug was approved for, and misleading insurance companies so they would cover the potent and pricey medication. With the drug’s sales soaring, Insys became a darling of Wall Street, generating annual sales at one point of more than $300 million.
The arguments presented at the trial have echoes in cases across the country, where prosecutors and state attorneys general are trying to hold major drug makers, like Purdue Pharma and Johnson & Johnson, accountable for the opioid epidemic that has killed tens of thousands of people in recent years.
But unlike the amalgam of recent civil lawsuits pending against opioid manufacturers and major distributors around the country, Mr. Kapoor and several former Insys executives were tried on criminal charges. They were accused of racketeering conspiracy, which can carry lengthy prison sentences. In addition to Mr. Kapoor, the other executives found guilty in the case were Richard M. Simon, the former national director of sales; Sunrise Lee and Joseph A. Rowan, both former regional sales directors; and Michael J. Gurry, former vice president of managed markets.
The former chief executive, Michael L. Babich, pleaded guilty to conspiracy and mail fraud charges.
Criminal charges against drug company executives are uncommon. One of the rare exceptions involved another opioid manufacturer, Purdue Pharma, whose executives pleaded guilty in 2007 to criminal charges that they misled regulators, doctors and patients about the addiction potential of the painkiller OxyContin.
At the Insys trial, the government suggested executives at the Arizona-based company often operated like drug dealers and that Mr. Kapoor was the ringleader.
“The decisions, the money, the strategy came from the top,” K. Nathaniel Yeager, a federal prosecutor, said during closing arguments.
Details of Insys’s strategy from 2012 to 2015 to target doctors and allegedly bribe them have been revealed in lawsuits and news reports for about five years. The trial of Mr. Kapoor and his four co-defendants has brought to light the extent to which the schemes permeated the entire company and its national sales team.
Former Insys sales representatives, testifying for the prosecution, said their bonuses were tied to the dosages of Subsys prescribed by the doctors they recruited. The higher the dose, the higher the bonus. Evidence presented in court showed that sales representatives had to justify low doses to their boss within 24 hours.
Not only did Subsys cost more at higher doses, but patients were also more likely to become dependent on the highly addictive medication. Subsys is up to 100 times more potent than morphine.
Alec Burlakoff, the former vice president of sales at Insys, has pleaded guilty to one count of racketeering conspiracy. He wrote in an email read at trial that patients on high doses would be desirable because they “will continuously refill their monthly prescriptions indefinitely.” Court filings in a separate case suggest Purdue Pharma, the maker of OxyContin, pursued a similar strategy.
Two Insys sales representatives made a rap video in 2015 about titration, the technique used to increase a patient’s dose. The main lyric: “I love titrations, and it’s not a problem. I got new patients, and I got a lot of them.” The video, in which the salesmen dance alongside a person in a Subsys dispenser costume, was shown at a national Insys sales staff meeting where Mr. Kapoor was present.
Testimony from government witnesses suggested there were few limits to what the Insys sales team was willing to do. Mr. Burlakoff, who testified for the prosecution as part of a plea deal, said the company purposefully targeted doctors with a history of liberally prescribing opioids. “Pill mills, for us, meant dollar signs,” he told the jury. “It was not run the other way. It was run to the pill mills.”
Holly Brown, a former Insys sales representative in the Chicago area, testified that she saw her boss, Ms. Lee, a former exotic dancer, give a doctor a lap dance hoping it would encourage him to prescribe Subsys.
After doctors prescribed Subsys, the company focused on persuading insurance companies to cover the drug, which can cost thousands of dollars a month. Jurors heard recorded calls from the Insys Reimbursement Center in which employees posed as doctor’s assistants and invented diagnoses that would smooth the approval process.
“Insurers were told about medical things that never happened,” Mr. Yeager told the jury. “They told deception after deception after deception on recorded lines.”
Brad Bailey, a former federal prosecutor of drug cases in Massachusetts, said the case highlighted the federal government’s efforts to broaden its strategies for curbing the epidemic.
The government is saying, “We have got to do something about the flow of opioids in this country — not from across the borders, not from people’s kitchens where they’re made and converted — but from the pharmaceutical companies that are making billions,” Mr. Bailey said.
In a similar effort to hold individuals accountable, the attorneys general in New York and Massachusetts have recently turned their attention to the Sacklers, the family that controls Purdue, filing lawsuits that allege members of the family pushed their company to aggressively sell opioids like OxyContin, despite the high risk for addiction.
While the legal strategy may be noteworthy, evidence has emerged that aggressive marketing of opioids is far from unique to Insys.
“The Insys story is symbolic, representative of the kind of conduct, the kinds of things that have been going on behind the scenes to fuel this opioid crisis,” said Gregory Curfman, deputy editor of the Journal of the American Medical Association.
Government lawyers called witnesses and presented their arguments over the course of two months. Defense lawyers rested their case in less than three days.
Beth Wilkinson, the lawyer for Mr. Kapoor, sought to persuade the jury that many of Insys’s marketing strategies were commonplace. Pharmaceutical companies often hire physicians to help promote their medications.
“In this country, that’s not illegal. In fact, it’s not even unusual,” Ms. Wilkinson told the jury during opening statements. Plus, she explained that “all the information is public” on the government’s Open Payments Data website.
“Things did go wrong,” Ms. Wilkinson conceded in closing arguments, but she laid the blame entirely on Mr. Kapoor’s colleagues. She singled out Mr. Burlakoff, the ex-vice president of sales who became a star prosecution witness, saying he “was at the center of it all.”
Lawyers on both sides acknowledged Mr. Burlakoff had a track record of lying and, at the end of one day of testimony, Judge Allison Burroughs called him “evasive.”
Judge Burroughs repeatedly questioned whether the government had enough evidence to prove the racketeering charge. Toward the end of the trial, the defense motioned for acquittal, arguing that the government had not proven that there was any agreement between Insys and physicians to write medically unwarranted prescriptions. Judge Burroughs said that while she would defer to the jury, she found this element of the prosecution’s case “pretty darn thin.”
Insys has struggled to move past its legal troubles. The company’s stock currently trades at around $4 per share, down from a high in 2015 of nearly $45, and it has disclosed to investors that it is at risk of going out of business. Last month, the company — which also sells a liquid form of an anti-nausea drug derived from cannabis — announced it was replacing its president and chief executive, Saeed Motahari, who had joined the company in 2017.
