Conviction Of Insys Execs Will Embolden Gov’t In Opioid Fight
By Chris Villani
Law360, Boston (May 3, 2019, 8:11 PM EDT) A Boston jury sent a message that will both resonate in the pharmaceutical industry and embolden already aggressive opioid prosecutions when it convicted five former Insys Therapeutics Inc. executives of bribing doctors to prescribe
opioids, experts said after Thursday’s landmark verdict.
The case marked the first successful prosecution of a top executive tied to addictive painkillers, and observers of the closely watched proceeding said it will lead to more corporate bigwigs getting in the government’s crosshairs.
“A prosecutor who is looking at a case with similar facts and similar underlying conduct is certainly going to be more emboldened to press charges, to actually indict and bring a case against similar defendants,” said Nicholas Jurkowitz, a partner at Fenton Law Group who works with health care providers on litigation and regulatory matters.
“People in these types of companies are going to be shocked by this and nervous,” Jurkowitz said. “If I were an executive in one of these companies across the country, I am going to be more concerned and more careful with how we market our products.”
The Boston federal jury found onetime billionaire and Insys founder John Kapoor and fellow former executives Michael Gurry, Rich Simon, Joseph Rowan and Sunrise Lee guilty of engaging in a racketeering conspiracy to funnel bribes to opioid prescribers in the guise of speaking fees.
The defendants had argued that their marketing techniques, while aggressive, were legal and had been conducted because they believed in the company’s fentanyl spray, Subsys. Federal prosecutors said the executives were driven by “greed” to sell as much Subsys as possible, incentivizing doctors to jack up doses or prescribe the powerful drug to people who didn’t need it.
“The concept of paying kickbacks to doctors — it’s sort of typical fodder for these health care prosecutions. What’s different here is that it was such an aggressive statement to opioid manufacturers,” said Michelle Peirce, a Boston white collar defense attorney and cochair of the litigation practice at Barrett & Singal PC.
Peirce said U.S. attorney’s offices across the country, which some have described as having a near militaristic approach to opioid enforcement, were going to aggressively attack the crisis regardless of the outcome in Insys, “but this will embolden them going forward and encourage them to go after these kinds of cases.”
Northeastern University School of Law professor Daniel Medwed said he wouldn’t be surprised to see statelevel district attorneys join the federal government in using criminal charges against pharmaceutical executives, now that a jury has shown a willingness to apply the Racketeer Influenced and Corrupt Organizations Act to them.
“It’s jurors viewing pharmaceutical executives as Mafia dons,” Medwed said. “The idea that citizens might be open to the idea of racketeering charges against corporate actors is pretty compelling.”
The U.S. Attorney’s Office for the District of Massachusetts seemed to play into the idea of painting Kapoor in that light, with Assistant U.S. Attorney Fred Wyshak, well known for prosecuting the Bostonarea mob, eliciting testimony that Kapoor preferred loyalty from wouldbe employees, even above integrity.
George Price, a partner at Casner & Edwards LLP and a former special agent with the U.S. Drug Enforcement Administration, said before the trial began in late January that a conviction against someone like Kapoor would be a “game changer” in opioid enforcement, a stance he maintained after the trial’s conclusion more than three months later.
“I think it was and it will be [a game changer], absolutely,” Price said Friday. “You’re starting to see real prosecutions of the executives in these companies. You’re going to have a lot of people wake up today much more concerned than they were yesterday.”
In a statement Thursday after the verdict, Kapoor’s attorney, Beth Wilkinson, noted the length of the deliberations — 15 days — and comments by U.S. District Judge Allison D. Burroughs that the government’s theory of a Controlled Substances Act violation is “pretty darn thin” as proof that the case was far from “open and shut.”
Drinker Biddle & Reath LLP partner and former federal prosecutor Antonio M. Pozos also referenced Judge Burroughs’ skepticism about part of the charge, saying, “It’s interesting whenever a judge decides to weigh in on the merits of the case.”
“It certainly possible this leads to more prosecutions, but these are complicated cases. We need to see what happens with the judge and on appeal,” Pozos said. “This is a significant victory for the prosecution team, but it’s too soon to make a big sweeping declaration.”
In addition to Wilkinson, who said she will “continue the fight to clear Dr. Kapoor’s name,” attorneys for Simon and Lee indicated plans to challenge the verdict.
The posttrial proceedings, especially in light of Judge Burroughs’ comments during last month’s predeliberation acquittal motion, will be interesting to follow to see whether they end up curtailing all or any part of the government’s win, Pozos said.
The case against Kapoor and company has garnered attention from around the country, but some have watched with a keener eye than others. Attorney Richard J. Hollawell is leading a civil suit against Insys, Kapoor and former Insys CEO Michael Babich in New Jersey on behalf of the estate of Sarah Fuller. After a series of car accidents, Fuller was prescribed Subys by a doctor connected to Insys’ controversial speaker program and died a little more than a year later of a drug overdose.
The possibility of putting executives behind bars presents a strong deterrent, Hollawell said, and the successful conviction gives prosecutors confidence to pursue similar cases, such as last week’s charges against New Yorkbased Rochester Drug CoOperative CEO Laurence Doud, which were the firstever criminal charges against a drug distributor for selling prescription opioids to pharmacies despite clear evidence the drugs were being diverted for illicit use.
“It is a totally different dynamic,” Hollawell said. “Paying money, they can deal with that because they make $1 billion on a drug and have to pay a fine of a couple hundred million and get to live another day. It’s the cost of doing business for them. But if you’re getting indicted and facing many years in jail, that’s a different story.”
The case is U.S. v. Babich et al., case number 1:16cr10343, in the U.S. District Court for the District of Massachusetts.
Editing by Jill Coffey and Alanna Weissman.