John Kapoor, Indian-American billionaire in Arizona arrested and charged with racketeering,Billionaire drug executive with Chicago ties is charged with bribing doctors to prescribe opioid

John Kapoor has been charged with leading a nationwide conspiracy to bribe doctors and pharmacists to overprescribe an opioid pain drug made by another company he founded. Kapoor is the longtime chairman of the board at Akorn, which is in the process of being acquired by German health care company Fresenius Kabi for $4.3 billion. (Oct. 30, 2017)

Billionaire drug executive 

with Chicago ties is 

charged with bribing 

doctors to prescribe opioid

John Kapoor, chairman of the board of Lake Forest-based Akorn Pharmaceuticals, has been charged with leading a nationwide conspiracy to bribe doctors and pharmacists to overprescribe an opioid pain drug made by another company he founded.

Kapoor, 74, founder of Insys Therapeutics, and a group of his colleagues at that company were charged Thursday with pushing prescriptions for the highly addictive drug Subsys the same day that President Donald Trump declared the opioid crisis a nationwide public health emergency.

Kapoor is the longtime chairman of the board at Akorn, which is in the process of being acquired by German health care company Fresenius Kabi for $4.3 billion. That deal is expected to close by early next year, subject to regulatory approval.

Attempts to reach Akorn for comment on Kapoor’s arrest were not immediately successful Friday morning. Kapoor, a Phoenix resident listed by Forbes as having a net worth of $1.75 billion, has been Akorn’s chairman since 1990.

The case naming Kapoor follows indictments against Insys’ former CEO and other executives and managers on allegations that they provided kickbacks to doctors to prescribe the potent opioid spray Subsys amid a drug epidemic that is claiming thousands of lives each year.

In August, Insys agreed to pay Illinois $4.45 million to settle allegations that it deceptively marketed and sold Subsys for uses not approved by the FDA. Illinois had sued the company in August 2016 in Cook County Circuit Court.

The new indictment alleges Kapoor and the other defendants offered bribes to doctors to write large numbers of prescriptions for the fentanyl-based pain medication that is meant only for cancer patients with severe pain. Most people who received prescriptions did not have cancer.

The indictment also alleges that the defendants conspired to mislead and defraud insurance providers who were reluctant to approve payment for the drug when it was prescribed for patients without cancer.

Federal prosecutors in Boston brought the case as part of "ongoing efforts to attack the opioid crisis from all angles," said Boston-based Acting U.S. Attorney William D. Weinreb.

A judge set bail at $1 million for Kapoor, saying he must wear electronic monitoring and surrender his passports. Kapoor, who was arrested earlier Thursday, entered court in basketball shorts, tennis shoes and a T-shirt, his long, gray hair disheveled.

"He is not guilty of these charges, he intends to fight it vigorously," defense attorney Brian T. Kelly said outside court. Kelly is a high-profile Boston lawyer and former federal prosecutor who successfully tried imprisoned gangster James "Whitey" Bulger.

In Massachusetts, former Insys CEO Michael L. Babich and five other former executives and managers have pleaded not guilty and are set to go to trial in October 2018. The latest indictment brings new charges against Babich and others.

Billionaire founder of Insys Therapeutics John Kapoor leaves U.S. District Court after being arrested earlier Thursday, Oct. 26, 2017, in Phoenix. 

(Ross D. Franklin / AP)

Several former Insys employees and health care providers have pleaded guilty to felony charges around the country, including in Alabama and Connecticut. A Rhode Island doctor pleaded guilty Wednesday to accepting kickbacks in return for prescribing Subsys.

A spokesman for Insys said this week that the company is under new management and has replaced nearly all its original sales staff. It says it takes responsibility for the actions of its former employees.

"We have taken necessary and appropriate steps to prevent past mistakes from happening in the future, and are committed to conducting business according to high ethical standards and the interests of patients," the company said Wednesday. "We also continue to work with relevant authorities to resolve issues related to the misdeeds of former employees."

After emigrating from India decades ago, Kapoor earned a doctorate in medicinal chemistry from the University of Buffalo, where the pharmacy school is named for him and his wife to honor their longtime philanthropy. He initially founded Akorn, a generic drug manufacturer, then later Insys Therapeutics in Chandler, Ariz., which went public in 2013. Kapoor also has a company that operates seven restaurants including the Japanese eatery Roka Akor, which has locations in Chicago’s River North neighborhood and Skokie, as well in Scottsdale, Ariz., Houston and San Francisco.

Kapoor was named Insys president and CEO in November 2015 after Babich resigned without explanation. He stepped aside in January, a month after six former Insys executives including Babich were arrested and charged in the ongoing federal probe.

U.S. authorities apparently have been investigating the company for some time. In late 2013, Insys said it received a subpoena from the Department of Health and Human Services asking for documents tied to the commercialization of Subsys. Nearly a year later, it received a subpoena from U.S. prosecutors in Boston for documents connected with sales and marketing practices for the drug.

In addition to the criminal charges, states have been suing Insys over its marketing practices.

The company has been active in politics, donating $500,000 last year to an Arizona campaign to defeat a ballot measure to legalize marijuana.

Insys' stock price has taken a big tumble in recent months amid the legal issues. Its stock plunged more than 20 percent Thursday.

The AP’s Jacques Billeaud contributed to this report from Phoenix.

As President Trump announced strong measures to fight the opioid epidemic, an Indian-American billionaire made the national news Oct. 26, when he was arrested and charged with racketeering, based on allegations that he and other executives in his company bribed doctors and pharmacists to prescribe the cancer pain drug fentanyl spray.

The U.S. Attorney for the District of Massachusetts, announced the arrest of John Kapoor, 74, the founder and majority owner of Insys Therapeutics Inc. Kapoor was charged with allegedly leading a nationwide conspiracy to profit by using bribes and fraud to cause the illegal distribution of a Fentanyl spray intended for cancer patients experiencing breakthrough pain. The medication, called “Subsys,” is a powerful narcotic intended to treat cancer patients suffering intense pain.

Kapoor’s lawyer said his client was innocent and intended to fight the accusations “vigorously” CBSNews reported.

Kapoor, of Phoenix, Ariz., a current member of the Board of Directors of Insys, was arrested this morning in Arizona and charged with RICO conspiracy, as well as other felonies, including conspiracy to commit mail and wire fraud and conspiracy to violate the Anti-Kickback Law. The  former Executive Chairman of the Board and CEO of Insys, appeared in federal court in Phoenix the same day.  He will appear in U.S. District Court in Boston at a later date.

The superseding indictment, unsealed today in Boston, also includes additional allegations against several former Insys executives and managers who were initially indicted in December 2016.

The superseding indictment charges that Kapoor and a slew of executives in the company, conspired to bribe practitioners in various states, many of whom operated pain clinics, in order to get them to prescribe a fentanyl-based pain medication.

The indictment also alleges that Kapoor and the six former executives conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients.  They allegedly achieved this goal by setting up the “reimbursement unit,” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers. In exchange for bribes and kickbacks, the practitioners allegedly wrote large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer.

The details contained in the charging documents are only allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

“In the midst of a nationwide opioid epidemic that has reached crisis proportions, Mr. Kapoor and his company stand accused of bribing doctors to overprescribe a potent opioid and committing fraud on insurance companies solely for profit,” Acting United States Attorney William D. Weinreb is quoted saying in the press release.

The charges of conspiracy to commit RICO and conspiracy to commit mail and wire fraud each carry a maximum sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000, or twice the amount of pecuniary gain or loss.  The charges of conspiracy to violate the Anti-Kickback Law provide for a sentence of no greater than five years in prison, three years of supervised release and a $25,000 fine.