How a Drugmaker Bribed Doctors and Helped Fuel the Opioid Epidemic

Insys Therapeutics profited off an addictive drug that 8,000 Americans died while taking

Joe Eaton

AARP Bulletin

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Published January 24, 2020

John Kapoor, who oversaw a criminal conspiracy that involved bribing a network of doctors to peddle highly addictive and deadly opioids for purposes for which they were never intended, was sentenced to 5½ years in prison Thursday by a federal judge.

Kapoor, who headed a specialty pharmaceutical company called Insys Therapeutics, became one of the richest people in America at the same time that more than 8,000 people died of overdoses after taking the drug Subsys, produced by his company, according to an AARP review of Food and Drug Administration (FDA) documents.

“This was an offense of greed,” U.S. District Court Judge Allison D. Burroughs said before sentencing another Insys executive, former vice president of sales Alec Burlakoff. He received 26 months in prison, despite confessing his role in the conspiracy and becoming a key government witness. Burroughs also sentenced several other top Insys executives to prison.

But the punishments weren’t enough for some. “They all got away with murder, because that’s exactly what they did,” Deb Fuller, whose daughter Sarah died from a Subsys overdose, told reporters outside the courthouse. “It’s more than Sarah that died from it.”

In an earlier interview with AARP, Fuller said that in 2015, the year Kapoor was named by Forbes magazine as among America’s 400 richest people, her daughter was prescribed the drug for injuries from car accidents and fibromyalgia. Her mother said she had no idea Subsys had been approved by the FDA only for terminal cancer patients who had developed a tolerance for other powerful narcotics.

Insys Therapeutics founder John Kapoor outside courthouse

Insys founder John Kapoor departs federal court in Boston on Jan. 30, 2019.

AP Photo/Steven Senne

Testimony at Kapoor’s trial proved to jurors that the company set up a conspiracy to bribe doctors to prescribe the drug for many other conditions as a way to boost sales.

According to her parents, Fuller was pitched the drug at a doctor’s appointment by an Insys salesperson and started taking it. “She started getting very lethargic,” her mother said. “You would be having a conversation with her, and she would fall asleep. She would fall out of bed. She stopped wanting to do anything.” A little more than a year after receiving the Subsys prescription, she was found dead at age 32 in her bedroom. She had lethal levels of the drug in her blood.

The Insys investigation continues. In late December, physician Kenneth Sun, 58, of Easton, Pennsylvania, pleaded guilty to his role in prescribing Subsys to people for whom it was never intended. He admitted to taking $140,000 in bribes and kickbacks from Insys sales representatives.

Many other doctors did the same. At his trial in 2019, Burlakoff told a chilling tale of how Kapoor and Insys executives pushed the company’s sales team to bribe doctors around the country with money, gifts and expenses-paid trips to strip clubs. In return, doctors wrote countless prescriptions for Subsys, frequently to patients with migraines, fibromyalgia and back pain. The scam fueled the company’s meteoric rise — and Kapoor’s personal wealth to over $3 billion. But for many patients, the practices led to addiction.

That included Paul Lara, a 56-year-old former seafood merchant and shrimp boat captain. He became dependent on Subsys when it was improperly prescribed to him. He survived but is still living with the impact of the drug.

In 2013, a doctor in Corpus Christi, Texas, prescribed Subsys to Lara to treat his spinal pain. Only later would Lara learn that his doctor had told insurers that Lara had cancer and needed the drug because he could not swallow other medications. “I didn’t know what fentanyl was,” Lara recalled. “I was naive to all this stuff. I just trusted my doctor.”

An AARP investigation pieced together a behind-the-scenes look at how Insys turned its opioid product into a financial windfall, while damaging thousands of lives. The investigation showed that far more people died while taking Subsys than had been previously reported, among other discoveries.

It is a tale of a corrupt company and some top executives who lost their way in the pursuit of wealth.

Bribe and prescribe

In 2012, Kapoor held a job interview with Burlakoff, a veteran pharmaceutical salesman who had worked for Eli Lilly and other drug companies, and was now offering his talents to Kapoor’s company.

Kapoor told Burlakoff that Insys faced a problem. Its new drug Subsys, a powerful, fast-acting but highly addictive fentanyl-based painkiller, had been approved by the FDA, but only for a very specific purpose: treating the severe pain of cancer patients for whom other opioids had failed.

Sales for that use had been lackluster; relatively few people fit that profile. And the drug had competitors. Kapoor complained that Subsys — by far the most important Insys product on the market — wasn’t as profitable as he hoped it would be.

Burlakoff suggested a solution. The FDA guidance on how Subsys could be used had a loophole: If a doctor saw a need, he or she could prescribe the drug for virtually any unapproved purpose — a practice called “off-label” prescribing. The company, he said, could redesign its speakers program, a common pharmaceutical industry practice in which doctors are paid to teach their peers about the benefits of a drug.

Former Insys CEO Michael Babich leaves U.S. courthouse in Boston following a hearing on Jan. 9, 2019.

Pat Greenhouse/The Boston Globe via Getty Images

“...we knew that if we got a patient on the drug, over time, they would become a greater revenue stream. The longer the patient stayed on the drug, the higher the dose that they were going to use, and the more revenue it was going to be worth to us.”

—Michael Babich on how increasing doses benefited the company

Instead of paying doctors to educate their peers, Insys would pay them simply to write masses of Subsys prescriptions for all kinds of ailments. Often, no speaking was required; just take the bribe and prescribe.

Kapoor slammed his fist on his desk. “That’s our next VP of sales!” he declared.

That meeting started the chain of events that would lead to a jury in Boston finding Kapoor and four other Insys executives guilty of federal charges related to the illegal methods used to sell Subsys. Burlakoff, who took the job and helped lead sales of the drug, and former Insys CEO Michael Babich also pleaded guilty to similar charges and have been sentenced.

An AARP review of FDA documents found that more than 8,100 people have died since 2012 while taking Subsys. Physician Caleb Alexander, codirector of the Johns Hopkins Center for Drug Safety and Effectiveness, said the Insys case provides a window into issues of manufacturers’ responsibility for creating the opioid epidemic. But it’s only one of hundreds of cases working their way through the courts, and Alexander thinks there will be many more to come.

“There is enormous interest in these cases because of how many people have been injured or killed by these products,” Alexander said.

Wining and dining the 'whales'

Older Americans are likely more at risk than others from misprescribed drugs such as Subsys because they are more likely to experience chronic pain, including from cancer. One in 5 older Americans filled at least one opioid prescription in 2015 and 2016, according to a 2018 study by the federal Agency for Healthcare Research and Quality. More than 7 percent filled four or more. Older Americans are also more likely to be taking prescriptions to treat other illnesses, which increases their likelihood of experiencing side effects and dangerous drug interactions.

It was that appetite for opioids — for legitimate and sometimes illegitimate purposes — that allowed the Insys scheme to flourish.

Not long after Burlakoff reported to work at Insys, he was put in charge of a new speakers program, as he had suggested, and company salespeople went searching for doctors to bribe. According to court testimony, some Insys salespeople were paid more than $400,000 a year in bonuses alone to target doctors and convince them to prescribe Subsys to patients at high rates, as well as higher and higher levels of potency.

Former Insys regional sales manager Sunrise Lee after the verdict in the racketeering trial on May 2, 2019.

John Tlumacki/The Boston Globe via Getty Images

“I would say that she did not have a very scientific- or product-focused approach. I think it was more social in nature. Definitely kind of sexually suggestive.”

—Former Insys sales representative Holly Brown on Sunrise Lee’s sales techniques

That required finding doctors who had no qualms about prescribing the drug off-label and for all types of pain. In time, these off-label prescriptions accounted for the majority of the company’s sales. Rather than target a large number of doctors, the salespeople targeted doctors they believed they could compromise — nicknamed “whales” — who would write up to $30,000 of prescriptions per patient each month.

“Pill mills for us meant dollar signs,” Burlakoff told the court. “That’s what we saw: dollar signs.”

If Insys paid a doctor $100,000, the company expected to receive at least $200,000 in profits from prescriptions written by that doctor. The company tracked prescriptions daily and charted the progress of individual doctors to ensure its payments were having the desired impact. When doctors failed to meet their numbers, salespeople were sent out to push them.

Kristoffer Tripplaar/Alamy Stock Photo

Timeline: The Rise and Fall of Insys

How Insys flourished, then failed, and the actions the FDA took during those years.

December 2011 — The FDA, in a move to mitigate the risk of a fast-acting class of fentanyl drugs approved only for cancer pain in patients already taking opioids, develops a safety program to restrict these drugs to cancer patients who are tolerant to opioids. The agency charges pharmaceutical companies with enforcement.

January 2012 — Insys wins FDA approval to market Subsys to adult cancer patients with pain that has already proved resistant to other opioid medications.

February 2013 — The FDA supports changing the patient-prescriber agreement in the oversight program so it becomes easier for doctors to prescribe the drugs to patients who are not tolerant to opioids. The change is in response to physicians’ concern that the requirement is “restricting medical judgment.”

May 2013 — Insys goes public with the highest-performing new stock offering of the year.

August 2013 — Insys sales representative Maria Guzman files a whistleblower suit that charges the company with bribing doctors to write prescriptions. Guzman is the first of many whistleblowers to come forward.

December 2013 — Insys receives a subpoena from the U.S. Department of Health and Human Services, Office of Inspector General. The subpoena requests documents related to the marketing of Subsys.

December 2013 — The FDA receives evidence that many patients who were prescribed powerful Transmucosal Intermediate-Release Fentanyls (TIRFs) like Subsys do not have cancer.

2015 — Insys founder John Kapoor’s net worth peaks at $3.3 billion on the Forbes 400 list of the richest people in the United States.

December 2016 — Six Insys executives are indicted on federal RICO conspiracy charges.

October 2017 — Kapoor is indicted on federal RICO conspiracy charges and other felonies. He resigns from the company’s board of directors.

2018 — More than 7,200 people die while taking Subsys this year, according to the FDA.

May 2019 — Kapoor and his codefendants are found guilty in federal court.

June 2019 — Insys agrees to pay $225 million to resolve federal civil and criminal investigations.

June 2019 — Insys files for bankruptcy.

January 2020 — Insys Therapeutics Inc. wins court approval of a bankruptcy plan to sell off Subsys to BTcP Pharma LLC and to pay less than a dime for each dollar it owes to the people, cities, states and tribes claiming damage from the drug.

January 2020 — Insys executives are sentenced to prison. Kapoor receives 5½ years. Four of his codefendants receive between one year and one day, and 33 months. Burlakoff and Babich, who cooperated with the government, receive 26 and 30 months, respectively.

The company wined and dined doctors at restaurants and took them to shooting ranges and strip clubs, and in some cases hired the staff of physician offices as employees of Insys in order to win business. And they used the sex appeal of young saleswomen in an attempt to lure doctors into prescribing.

In one case, Burlakoff hired his college roommate, Joe Rowan, a pharmaceutical salesman at another company, because of his relationship with physician Xiulu Ruan, an Alabama pain specialist. Ruan, who with another other doctor prescribed $4.9 million worth of Subsys to Medicare patients in 2013 and 2014, quickly made Rowan the company’s top salesman. Ruan is currently serving a 21-year sentence on federal drug and fraud charges. Rowan was sentenced to 27 months in prison Thursday.

Burlakoff also hired Sunrise Lee, a former escort service manager he met in a strip club, as a regional sales manager for the company. Lee, who was also found guilty as part of the trial, allegedly gave a lap dance to a doctor at a Chicago strip club. Lee was sentenced to a year and a day in prison.

Skirting the insurance companies

It wasn’t enough to convince doctors to prescribe Subsys. In order for the company to be paid, pharmacies needed to provide the drug to patients, and insurance companies needed to accept the charges.

But most insurance companies required prior authorization before they would cover a Subsys prescription, and that authorization should have been difficult to get, since around 80 percent of patients prescribed the drug did not have cancer. Since most insurance companies would not pay claims for off-label Subsys prescriptions, except in exceptional circumstances, the company faced a problem.

It quickly found a solution. Instead of relying on doctors’ offices to communicate with pharmacies, the company built its own reimbursement center, where workers were paid commissions based on insurance approvals of Subsys. The workers were taught to tell insurance companies and pharmacies they were calling from doctors’ offices rather than from Insys, and they learned to game the system by saying patients had tried other drugs that were not effective, and most importantly, that they had cancer when they did not.

“Whether they had active cancer, or cancer 20 years ago or skin cancer or whatever, they would say they had cancer, and that gave them extra confidence on the phone,” Burlakoff told the court during the trial.

Driven to bankruptcy

The impact of the case has been devastating for Insys. In June, the company — which had brought only one other drug to market but had others in testing — agreed to pay $225 million to settle the federal government’s multiple criminal and civil charges against Insys. Within a week, Insys filed for Chapter 11 bankruptcy. In August, most of its assets were sold to another company; Subsys is still being prescribed by another firm but at a much lower volume.

Insys was the first pharmaceutical company driven to bankruptcy from lawsuits over the opioid crisis. Purdue Pharma, a much larger company, declared bankruptcy in September.

Kapoor’s fortune was once estimated at $3.3 billion. His remaining personal wealth is at great risk. Under federal racketeering laws, prosecutors have pushed for forfeitures of about $113 million gained from the illegal activity.

For victims like Lara, the consequences of the Insys conspiracy linger.

Lara took Subsys for a year, and he figures it probably would have killed him if his doctor hadn’t lost his license in a federal sting. Lara went through a lengthy withdrawal that he calls “pure hell.” He worried that he was dying back when he was taking the drug. After he quit, things got worse. Lara said he spent nearly a year in bed, suffering from what felt like an extended bout of the flu.

Lara first learned about the scam from federal agents who interviewed him regarding his prescription. When he found out his doctor had prescribed him drugs that could have killed him in return for money, he was more shocked than angry. “You need that kind of money that you don’t care about other people’s lives?” Lara asked. “God gave him the ability to make medicine to cure people, and he does this? Can you imagine Judgment Day for this man? I feel sorry for the guy. I really do.”

Editor's note: This article was originally published on November 20, 2019. It has been updated to reflect the sentencing of several Insys executives and the guilty plea of another doctor who took bribes from the company.

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Joe Eaton is a writer, professor and former investigative reporter for the Center for Public Integrity.