Immigrant billionaire founded embattled drug company

Immigrant billionaire founded embattled drug company

A drug company founder charged with leading a nationwide conspiracy to bribe doctors and pharmacists to widely prescribe a highly addictive opioid painkiller to people who didn’t need it came to the U.S. from India for postgraduate studies and for a time was listed among Arizona’s richest billionaires.

John N. Kapoor launched Insys Therapeutics, which is embroiled in new allegations against its founder and previous indictments against its former CEO and other executives and managers. Its stock price has taken a big tumble in recent months amid the legal trouble, but the company has said it is under new management.

The federal fraud and racketeering indictment Thursday came the same day President Donald Trump declared a nationwide public health emergency over the opioid epidemic that claims thousands of lives each year.

Kapoor emigrated from India decades ago and earned a Ph.D. 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 Pharmaceuticals, an Illinois-based generics drug manufacturer, then later Insys Therapeutics in Chandler, Arizona, which went public in 2013. Kapoor also has a company that operates seven restaurants including the Japanese eatery Roka Aker in Scottsdale, Arizona, and several establishments in Chicago.

Forbes said several years ago that Kapoor was worth $2.4 billion. That has fallen amid legal troubles for Insys Therapeutics, but the magazine still listed Kapoor’s worth at $1.75 billion Friday.

Insys has faced increasing scrutiny from authorities across the country over allegations of pushing prescriptions of a potent fentanyl-based spray called Subsys meant only for cancer patients with severe pain.

Federal prosecutors in Boston brought the case against former Insys CEO Michael L. Babich and five other former executives and managers, who are set to go to trial in October 2018 and have pleaded not guilty.

The latest Boston-based indictment brings new charges against Babich and others. It alleges Kapoor and the others provided kickbacks to doctors to prescribe the painkiller and conspired to defraud insurance providers. Most people who received the prescriptions did not have cancer.

A judge set bail for Kapoor, 74, of Phoenix, at $1 million and said he must wear electronic monitoring and surrender his passports. Defense Brian T. Kelly, a high-profile Boston lawyer and former federal prosecutor who successfully tried imprisoned gangster James “Whitey” Bugler, said Kapoor is not guilty.

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 the highly addictive fentanyl spray.

Fentanyl is useful for managing pain during surgery and for people with end-stage cancers, said Dr. Karen Sibert, an associate clinical professor with UCLA Health’s Department of Anesthesiology and Perioperative Medicine. But it and other opioids are “the worst choice” for long-term pain in otherwise healthy people, she said.

Sibert said opioids are especially dangerous when used incorrectly and without medical supervision because they can cause a person to stop breathing.

“If you have extreme pain from end-stage cancer, the risk from stopping breathing is an acceptable risk,” she said. “But it’s not if you are a young person with back pain.”

A spokesman for Insys said this week that the company has new managers and has replaced nearly all its original sales staff. The company assumed responsibility for the actions of its former employees, saying it had “taken necessary and appropriate steps to prevent past mistakes from happening in the future.”

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.


Associated Press writer Jacques Billeaud contributed to this report from Phoenix.


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