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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

WATCH: Doctor-Prescribed Opioids Nearly Killed This Grandfather

En español | What would you do to become one of the richest people in America?

For John Kapoor, who ran a specialty pharmaceutical company in Arizona called Insys Therapeutics, the answer was simple: whatever it takes, even if that meant bribing a network of doctors to peddle a highly addictive medicine for purposes for which it was never intended.

That's what a jury found in May, when it convicted Kapoor and several other company executives of racketeering in the illegal marketing and sales of Subsys, a fast-acting, painkilling spray containing fentanyl, a synthetic form of opioid that is many magnitudes stronger than opium or heroin.

That drug was approved by the Food and Drug Administration for the narrow purpose of providing relief to cancer patients for whom other opioids no longer worked. But to increase their customer base, corrupt doctors who had taken six-figure financial payoffs from Insys prescribed Subsys for a whole range of ailments, some for conditions that had nothing to do with cancer, such as migraine headaches.

And to increase profits, doctors were goaded to increase the dosages for their patients over time. What followed was a stream of addictions and overdose deaths that was part of the tragic opioid epidemic that has plagued America these past several years.

In January, seven Insys executives are scheduled to be sentenced for their crimes. To more fully reveal the scope and audacity of the Insys case, AARP writers and researchers spent months poring through court proceedings others had overlooked and talking to victims who opened up about how taking Subsys wrecked their lives or doomed loved ones.

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

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

And it is an account of shattered lives — such as Sarah Fuller of New Jersey, who died after becoming addicted to Subsys, which she should never have been prescribed, and Texan Paul Lara, who became hooked on Subsys after his doctor lied to his insurance company, claiming he needed the drug to treat cancer he never had.

Insys Therapeutics founder John Kapoor outside courthouse

AP Photo/Steven Senne

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

Bribe and prescribe

In 2012, Kapoor held a job interview with Alec 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 Food and Drug Administration, 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 — there were relatively few people who 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.

But instead of paying doctors to educate their peers, they 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 to find 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 are cooperating with prosecutors.

At the trial, Burlakoff and others 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 catapulted the company's meteoric rise — and Kapoor's personal wealth to over $3 billion. But for many patients, the practices led to addiction.

Former Insys CEO Michael Babich

Pat Greenhouse/The Boston Globe via Getty Images

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

“...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

That included Lara, a 56-year-old former seafood merchant and shrimp boat captain. He became dependent on Sybsys 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 he 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."

Lara took the drug 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."

Lara was one victim among many. Experts say the true impact of the Insys fraud may never be known, but it's clear the overprescribing of Subsys fueled the ongoing opioid public-health epidemic.

An AARP review of FDA documents found that more than 8,100 people have died since 2012 while taking Subsys. Caleb Alexander, M.D., the codirector of the Johns Hopkins Center for Drug Safety and Effectiveness, said the Insys case provides a window to look 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.

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. It was not run the other way. It was run to the pill mill."

Sunrise Lee leaving a Boston courthouse

John Tlumacki/The Boston Globe via Getty Images

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

“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

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 their payments were having the desired impact. When doctors failed to meet their numbers, salespeople were sent out to push them.

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 female 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 Xiulu Ruan, M.D., 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.

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.

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 when there were outside 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.

Stop Rx Greed Cut Drug Prices Now

It didn't take long for the illegal arrangements to come to light. In 2013, whistleblower lawsuits by former employees describing some of the illegal activities began to be filed. By 2016, there would be five such suits laying out the criminal conspiracy at the heart of the company's success.

Federal law enforcement agencies also began an investigation of Insys and the off-label prescription of Subsys as early as 2013. That probe lasted for more than three years.

In December 2016, Burlakoff, former Insys CEO Mike Babich and five others were arrested on federal racketeering charges. Burlakoff would eventually plead guilty to his part in the scheme in a deal with prosecutors and become a critical witness against Kapoor and others.

Kapoor was arrested in the fall of 2017. Since that time, he has expressed no remorse for his actions or what the company did.

He resigned after his arrest but vowed in his last public statement: “I am confident that I have committed no crimes and believe I will be fully vindicated after trial.” In May, a federal jury in Boston proved that statement hollow.

Driven to bankruptcy

While sentencing has yet to occur, the impact of the case has been devastating for Insys. In June, the company — which had only brought 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, whose fortune was once estimated at $3.3 billion, and the others convicted of racketeering in May face up to 20 years in prison. His remaining personal wealth is at great risk. Under federal racketeering laws, prosecutors have pushed for forfeitures of hundreds of millions of dollars gained from the illegal activity. That includes Kapoor's 60 percent ownership stake in the company and property purchased with illegally gained profits.

But some of those who were enticed to take the powerful drug they peddled will not be around to see justice run its course.

In 2015, the year that Insys profits propelled Kapoor onto the Forbes 400 list of the richest people in America, Sarah Fuller was prescribed Subsys to treat pain from two car crashes and fibromyalgia. According to her parents, Fuller was pitched the drug at a doctor's appointment by an Insys salesperson.

She had no idea the drug had never been approved by the FDA to treat her ailment. Immediately after going on Subsys, Fuller changed. “She started getting very lethargic,” her mother, Deborah Fuller 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 subscription, Sarah Fuller, 32, was found dead in her bedroom. She had lethal levels of the drug in her blood.

A logo sign outside of the headquarters of Insys Therapeutics in Chandler, Arizona

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.

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