The same day President Donald Trump declared the opioid crisis a nationwide public health emergency, the federal government said it arrested a wealthy pharmaceutical company executive on charges of bribing doctors to needlessly prescribe his firm’s opioid painkiller.
The Department of Justice arrested Insys Therapeutics founder John Kapoor, 74, in Phoenix, it said Thursday. Kapoor was charged with using bribes and fraud to prop up sales of a pain medication called Subsys, a fentanyl spray typically used to treat cancer patients suffering excruciating pain.
Kapoor’s arrest comes nearly a year after former Insys CEO Michael Babich and five other onetime executives were arrested as part of an alleged “nationwide conspiracy.”
The Justice Department claims that Kapoor and other Insys executives offered bribes in the form of kickbacks to doctors who wrote “large numbers of prescriptions” for patients, many of whom did not have cancer. The Department also alleged that the executives defrauded insurers by forming a “reimbursement unit” dedicated to obtaining prior authorization from insurers who were reluctant to pay for the drug.
“These Insys executives allegedly fueled the opioid epidemic by paying doctors to needlessly prescribe an extremely dangerous and addictive form of fentanyl,” Phillip Coyne, special agent in charge for the Office of Inspector General of the U.S. Department of Health and Human Services, said in a press release.
“The allegations of selling a highly addictive opioid cancer pain drug to patients who did not have cancer, make them no better than street-level drug dealer,” added Harold Shaw, a Federal Bureau of Investigation special agent.
Insys did not immediately return Fortune’s request for comment.
Insys’ stock closed down nearly 23% following the news of Kapoor’s arrest, pushing the company’s valuation down to $417 million. It was a stunning retreat, considering the company was valued at over $19 billion as recently as 2015, when concerns about the company’s practices were first raised. (Insys is now also developing its own drug to reverse opioid overdoses.)
Insys’ falloff has cost Kapoor a hefty portion of his own net worth, which is made up in part of company stock. At Insys’ peak, Kapoor’s current stake in the company was worth over $1.9 billion. By Thursday’s close, it was down to $246.7 million. (Kapoor still holds a $1 billion stake in Akorn Pharmaceuticals, a generic drug maker where he also serves as board chairman. Akorn’s stock was down about 1% at Thursday’s close.)
Kapoor is set to make a court appearance in Phoenix at a later date.
Source: Fortune Magazine Online