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Founder of opioid company arrested on racketeering and fraud charges

Oct 27, 2017

Credit flickr user frankileon / http://j.mp/1SPGCl0

The founder of a company being sued by Wayne and Oakland counties has been arrested on charges of racketeering, mail fraud, and wire fraud, among others.

Insys Therapeutics is one of the companies named in a broad lawsuit targeting manufacturers and distributors of opioid drugs. The lawsuit alleges that a number of companies engaged in misleading and deceptive marketing tactics, and that many failed to report suspicious deliveries of drugs a required by law. 

John Kapoor is the founder of Insys and majority shareholder. In addition to new charges against Kapoor, federal prosecutors are adding more charges against six executives already indicted on similar charges in 2016.

Those charges go beyond deceptive marketing to bribery and fraud. The new indictment alleges that Kapoor and the other executives conspired to bribe doctors in many states, including Michigan, to prescribe the company's fentanyl-based pain medication, Subsys, outside its approved use for breakthrough pain in cancer. They allegedly encouraged doctors to prescribe the drug for problems like neck and back pain, and gave kickbacks and bribes to doctors for writing large numbers of prescriptions.

The indictment also alleges that Kapoor and the other company executives defrauded health insurance providers by providing misleading information to insurance companies in order to get prior authorization for prescriptions. 

Public records show that almost 20,000 units of Subsys were prescribed to Wayne County residents from 2014 to 2016, and 6,400 to Oakland County residents in the same period. 

According to the lawsuit, Insys used a number of schemes to target prescribers, including a sham speaker's bureau that provided speaking fees to heavy prescribers. Reports from 2013 through 2016 showed that Insys paid $32,000 to Wayne County physicians and about $17,000 to Oakland County physicians for participating in the speakers' bureaus and other services. 

One heavy prescriber of Subsys, Dr. Gavin Ira Awerbuch, was arraigned in 2014 in the Eastern District of Michigan for illegitimately prescribing Subsys. According to that complaint, Awerbuch wrote more than twenty percent of Subsys prescriptions for Medicare beneficiaries nationwide between 2009 and 2014. Awerbuch pled guilty to health care fraud and distribution of controlled substances in 2016.