BOSTON — In a landmark blow to Big Pharma’s shadow game, Insys Therapeutics founder John N. Kapoor, 76, of Phoenix, Ariz., was convicted alongside four former executives in a federal racketeering conspiracy that fueled the opioid epidemic through bribes, lies, and insurance fraud. A Boston jury found Kapoor and his inner circle guilty of using illegal kickbacks and deceptive practices to push Subsys — a potent fentanyl spray meant only for cancer patients — onto unsuspecting patients and insurers.
The convicted include Richard M. Simon, 48, of Seal Beach, Calif., the former National Director of Sales; Sunrise Lee, 38, of Bryant City, Mich., a former Regional Sales Director; Joseph A. Rowan, 45, of Panama City, Fla., another former Regional Sales Director; and Michael J. Gurry, 55, of Scottsdale, Ariz., ex-Vice President of Managed Markets. All were found guilty of RICO conspiracy, marking the first time top pharmaceutical executives have been held criminally liable for their role in the opioid crisis.
From May 2012 to December 2015, the defendants built a criminal sales machine. They used pharmacy data to target pain doctors writing high volumes of opioid scripts, then funneled bribes through sham “speaker programs” — lavish dinners and fake educational events — to secure more Subsys prescriptions. Prescriptions had to justify the payoff: the target was at least double the bribe amount in net revenue. Doctors who underperformed were cut off, turning medical practice into a cold-blooded quota system.
When insurers balked at paying for Subsys in non-cancer patients — as they should — the conspiracy escalated. The company created the Insys Reimbursement Center (IRC), where employees posed as doctors’ office staff and used a script known as “the spiel” to lie to insurance companies. They falsely claimed patients had cancer-related pain, knowing insurers were more likely to approve the $25,000-a-year drug under those conditions. The fraud was systematic, recorded, rehearsed.
Before trial, two key insiders flipped: Michael Babich, former CEO and President of Insys, of Scottsdale, Ariz., and Alec Burlakoff, former Vice President of Sales, of Charlotte, N.C. Their testimony peeled back the curtain on a corporate culture soaked in greed, where sales targets trumped patient safety and compliance was a punchline. Executives celebrated high prescribers like athletes, while patients spiraled into addiction.
“Today’s convictions mark the first successful prosecution of top pharmaceutical executives for crimes related to the illicit marketing and prescribing of opioids,” said United States Attorney Andrew E. Lelling. “Just as we would street-level drug dealers, we will hold pharmaceutical executives responsible for fueling the opioid epidemic by recklessly and illegally distributing these drugs.” Sentencing dates have not yet been set, but the verdict sends a clear message: no corner office shields you from justice.
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Key Facts
- State: Massachusetts
- Agency: DOJ USAO
- Category: White Collar Crime
- Source: Official Source ↗
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