December 2, 2019

A federal judge on Tuesday partially vacated criminal convictions against Insys Therapeutics' founder and three former executives in a first-of-its-kind case accusing the executives of contributing to the opioid epidemic.

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The news comes amid separate reports that federal prosecutors have opened investigations into whether various pharmaceutical companies criminally violated federal drug laws in relation to the opioid epidemic, according to the Wall Street Journal.

Background: Insys execs found guilty in first-of-its-kind criminal case regarding opioid epidemic

Insys founder and former CEO John Kapoor in October 2017 was indicted and arrested on charges that he allegedly provided kickbacks to physicians for prescribing the company's potent fentanyl opioid Subsys. In addition to Kapoor, the federal indictment listed several other defendants, including:

  • Former Insys VP Michael Gurry;
  • Former Insys national sales director Richard Simon; and
  • Former Insys regional sales directors Sunrise Lee and Joseph Rowan.

The indictment alleged those individuals, and others at Insys, offered bribes to doctors so they would write a significant number of prescriptions for Subsys, even though the drug is intended only to treat cancer patients with severe pain. Most individuals who were prescribed Subsys did not have cancer, according to the indictment.

In addition, the indictment alleged that Kapoor and others conspired to mislead and manipulate insurers so they would cover Subsys when it was prescribed to individuals who did not have cancer.

A federal jury in May found Kapoor guilty on charges of conspiracy to commit racketeering and convicted Simon, Lee, Rowan, and Gurry on related charges.

Judge partially vacates convictions

However, U.S. District Judge Allison Burroughs on Tuesday overturned the former executives' convictions for conspiring to illicitly distribute a controlled substance, in violation of the Controlled Substances Act, and commit honest services fraud.

Burroughs in her ruling wrote that the evidence prosecutors had presented during the jury trial did not support the jury's findings that the former executives meant to persuade providers to prescribe Subsys to patients for which the drug was not intended. "Even though the evidence could be readily understood as proving that defendants did not care whether patients needed the drug, that still is not enough to prove the requisite intent," she wrote. Burroughs added, "The government could have easily proved bribery, but it elected not to charge bribes or kickbacks and now must live with that decision." She concluded, "The court only very reluctantly disturbs a jury verdict, but finds it necessary to do so here."

Burroughs left all other convictions from the jury's ruling in place, including convictions related to mail and wire fraud, but her ruling might affect the former executives' sentencing, Reuters reports. According to Reuters, the former executives' sentencings are scheduled for next month.

Under the charges for which the former executives originally had been convicted, Kapoor and his former colleagues could have faced up to 20 years in prison. Brad Bailey, a criminal defense attorney and a former federal prosecutor, said the overturned convictions could "bring down the calculus and result in a sentence that's going to be less tomorrow than what it was this morning."

Beth Wilkinson, Kapoor's lawyer, said, "We have always believed that the government brought charges it could not sustain." According to WGBH, Wilkinson had requested a new trial for Kapoor, but Burroughs on Tuesday denied that request.

An Insys spokesperson declined to comment on the matter, WGBH reports.

Federal prosecutors launch criminal investigation related to opioids, sources say

Burroughs' ruling comes amid separate reports that federal prosecutors have opened investigations into whether various pharmaceutical companies criminally violated the Controlled Substances Act in relation to the opioid epidemic, the Journal reports.

According to the Journal, six companies—AmerisourceBergen, Amneal Pharmaceuticals, Johnson & Johnson (J&J), McKesson, Mallinckrodt, and Teva Pharmaceutical Industries—in regulatory filings said they had received grand-jury subpoenas from the U.S. attorney's office in the Eastern District of New York, and those subpoenas are connected with the Brooklyn-based federal criminal investigation, people familiar with matter said.

According to the Journal, people familiar with the investigation said federal prosecutors are looking into whether pharmaceutical companies intentionally flooded communities with opioids. If the investigation leads to criminal charges, it could result in "the largest prosecution yet of drug companies alleged to have contributed to the opioid epidemic," the Journal reports.

A J&J spokesperson said the company knew the subpoena stemmed from a broader investigation into the pharmaceutical industry, and the company believes its procedures and policies intended to stop prescription opioid misuse complied with federal law.

A Teva spokesperson said the company is cooperating with the subpoena and is confident in its practices for tracking prescription opioids.

According to the Journal representatives for Amneal and McKesson did not respond to requests for comment, and representatives for AmerisourceBergen and Mallinckrodt declined to comment on the matter.

A spokesperson for the Brooklyn U.S. attorney's office also declined to comment, the Journal reports (Raymond, Reuters, 11/26; Bedford, WGBH/NPR, 11/26; Ramey, Wall Street Journal, 11/26; Owens, "Vitals," Axios, 11/27; Hals et al., Reuters, 11/26).

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