Dive Brief:
- John N. Kapoor, the founder and majority owner of opioid drugmaker Insys Therapeutics Inc., has resigned from the company's board of directors following his arrest last week on charges alleging he conspired to push prescriptions of fentanyl spray.
- In a resignation letter published by Insys, Kapoor expressed confidence that he committed no crimes, but saw his continued involvement as a distraction for the company. He has put all his shares in a trust that he says will be controlled independently.
- The Department of Justice charged Kappor with leading a "nationwide conspiracy to profit" off of illegal distribution of the company's fentanyl spray, intended for use in treating cancer-related pain. The indictment also included new allegations against six former company executives that were first indicted in December 2016.
Dive Insight:
Insys' bad year continues to get worse. Along with the resignation of Kapoor, Patrick Fourteau has also stepped down from the board of directors, citing "personal reasons."
Nasdaq had halted trading in Insys stock following the new charges and resignations, and the company's share price now sits at nearly a tenth of its five-year high in the summer of 2015.
In addition to criminal charges against former execs, Insys is also facing a swath of lawsuits regarding its questionable marketing practices for its sublingual fentanyl spray, Subsys, with the latest being from New Jersey lawmakers. Insys has pushed back, branding the allegations unfair, but the company remains a focus of investigations into the opioid crisis.
On the DOJ's charges, Insys is in discussion with the government regarding a resolution of potential liability exposure, and has set aside $150 million as of September 30, 2017, to cover expenses it expects to pay over five years. The Department of Justice, however, has not yet accepted Insys' offer, and the final amount of potential liability may exceed that sum.
Insys' involvement in opioid scandals go back a number of years, however.
In 2014, an analysis from The Wall Street Journal of Insys' payments to physicians linked five of the 20 top paid doctors with legal or disciplinary actions, including inappropriate prescribing of painkillers. The investigation also suggested many of those doctors were also amongst the highest prescribers of Subsys, Insys' fentanyl sublingual spray.
In the same year, a Michigan neurologist was put under federal investigation for Medicare fraud, which included $6.9 million of Subsys prescriptions between 2009 and 2014 — one fifth of the Medicare Subsys prescriptions over this period. In September 2014, Insys received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts over Subsys sales and marketing practices.
Scrutiny continued to mount as two more pain specialists were arrested in 2015 as part of a national Drug Enforcement Agency effort to crack down on prescription drug abuse. Both had been top prescribers of Insys Therapeutics' Subsys (fentanyl sublingual spray), despite neither being an oncology specialist.
By the end of 2016, six former executives had been arrested and charged with bribing doctors to prescribe Subsys.
Insys recently settled a lawsuit with the state of Illinois in August 2017 for $4.5 million, with the money going to fund programs tackling the growing problem of opioid abuse in communities throughout Illinois.
"Our future success will be grounded by a culture of ethical business practices and placing patients' interests at the forefront of the choices we make as an organization," said Saeed Motahari, Insys president and CEO, in a Oct. 29 statement on the company's future. "We will continue to cooperate with ongoing investigations and strive to resolve them as circumstances permit."