BOSTON (Reuters) – A unit of Insys Therapeutics Inc pleaded guilty on Friday to fraud charges as part of an $225 million deal with the U.S. Justice Department resolving claims that the drugmaker bribed doctors to prescribe an addictive opioid medication.
FILE PHOTO: John Kapoor, the billionaire founder of Insys Therapeutics Inc., leaves the federal courthouse in Boston, Massachusetts, U.S., March 13, 2019. REUTERS/Brian Snyder/File Photo/File Photo
The plea, in federal court in Boston by the Chandler, Arizona-based Insys’ operating subsidiary, came in one of the few criminal prosecutions to date of a corporation accused of helping fuel the nation’s deadly opioid epidemic.
The plea deal was announced on Wednesday, a month after a federal jury found wealthy Insys founder John Kapoor and four other former executives and managers guilty of engaging in a vast racketeering conspiracy.
Insys is facing growing financial pressures as a result of the U.S. probe and a decline in sales of its flagship fentanyl pain product, Subsys, which it has said could prompt the company to seek bankruptcy protection.
Beyond the plea by subsidiary Insys Pharma Inc, Insys has also entered into a five-year deferred prosecution agreement with the government and agreed to pay $30 million in the criminal case and $195 million to resolve civil claims.
U.S. District Judge Rya Zobel approved the parent company’s deferred prosecution agreement at Friday’s hearing and scheduled sentencing for the subsidiary for July 10.
Insys in a statement said it believes the deal is in its best interests. Kapoor and his co-defendants deny wrongdoing and are expected to appeal.
Subsys is an under-the-tongue spray the U.S. Food and Drug Administration approved in 2012 only for treating pain in cancer patients. Its main ingredient, fentanyl, is an opioid 100 times stronger than morphine.
Prosecutors alleged that while Kapoor served as Insys’ chairman, the company from 2012 to 2015 paid doctors and other medical practitioners bribes in exchange for prescribing Subsys to their patients, often to those who did not have cancer.
Insys did so by paying medical practitioners to act as speakers at sham events ostensibly meant to educate clinicians about Subsys but that were often just social gatherings at high-priced restaurants with no real attendees.
Those practitioners include a former New Hampshire physician assistant, Christopher Clough, who prosecutors say received $44,000. Payments to Clough form the basis of the plea by the subsidiary to five counts of mail fraud.
Clough was sentenced on Monday to four years in prison after being convicted of accepting kickbacks from Insys. He plans to appeal.
Reporting by Nate Raymond in Boston; Editing by Bill Berkrot and Steve Orlofsky