Insys Founder Tries to Shift Blame in Opioid Trial to Staff

(Bloomberg) -- Insys Therapeutics Inc. founder John Kapoor didn’t know underlings were cutting side deals with doctors who got fees for writing prescriptions of his company’s opioid-based painkiller, his lawyer told a Boston jury at the start of his racketeering trial.

Alec Burlakoff, a former Insys sales executive, sought to block Kapoor from reviewing payments to doctors who wrote prescriptions for the Subsys painkiller so the manager could have “free rein’’ over the project, Beth Wilkinson, Kapoor’s lawyer, said Monday in her opening statement.

Kapoor, former chairman and CEO of Insys, and four others face racketeering and conspiracy charges on allegations that they used speaker fees to ramp up Subsys sales and lied to insurers about which patients were getting the drug.

“All the criminal activities lead back to one person only -- Alec Burlakoff,” Wilkinson said. Burlakoff and former CEO Michael Babich will be the government’s star witnesses in a trial that may last more than three months. Burlakoff pleaded guilty to the racketeering and conspiracy charges; Babich to conspiracy and mail fraud.

The case is the first prosecution of a pharmaceutical company chief executive tied to the national opioid epidemic, with lawyers involved in thousands of civil lawsuits watching closely for jury reaction to the evidence presented.

Faces Prison

A conviction could turn Kapoor into the face of the opioid crisis, which claims more than 100 lives in the U.S. daily, according to government research. He and the other defendants are facing as long as 25 years in prison. U.S. District Judge Allison Burroughs warned jurors before opening statements not to turn the case into a “referendum on U.S. health-care policy.”

The government accuses Kapoor of masterminding the scheme to bribe doctors across the country to get more and more patients on Subsys. Insys reported to the U.S. Food and Drug Administration that more than 900 people died while taking Subsys since it was approved in 2012.

Assistant U.S. Attorney David Lazarus told the jury Kapoor put profit over people in his push for Insys to be a smash through Subsys sales. He turned Insys into a “criminal enterprise,” he said.

“John Kapoor sought to get the success he demanded by breaking the law,” Lazarus told the panel. “The evidence will show the criminal agreement wasn’t just a small part of Insys. It became Insys. It was Insys.”

Extreme Pain

The other defendants include former vice president Michael Gurry, ex-national sales director Richard Simon and former regional sales director Joseph Rowan. Also charged was Sunrise Lee, a former stripper hired as an Insys sales manager.

Lazarus said the defendants helped facilitate the conspiracy in different ways. Gurry, who oversaw Insys’s personnel working with insurers to get Subsys prescriptions covered, encouraged them to lie about which patients were receiving the drug, he said. Subsys was approved only for late-stage cancer patients suffering extreme pain.

Lee gave a lap dance to a doctor in exchange for a Subsys prescription, the prosecutor said. “She got personal with him,” he said.

Tracy Miner, Gurry’s lawyer, said that Gurry didn’t direct anyone to lie and that his subordinate, Elizabeth Gurrieri, oversaw the scheme to mislead insurers. “She ran it her way,” Miner said. “She bent the rules.”

Gurrieri, who pleaded guilty in 2017 to deceiving insurers about Subsys prescriptions, is slated to testify in the government’s case against Kapoor and others. She has yet to be sentenced

Steak Dinners

Rowan’s lawyer, Michael Kendall, said his client used only legal marketing tactics to push Subsys to doctors, including having subordinates leave steak dinners at physicians’ offices and then expense those meals.

“That’s not criminal. That’s not a gratuity that puts you in racketeering enterprise,’’ Kendall said. “That’s a salesperson saying how do you get a busy doctor to spend some time with you.’’

Kendall said that a former Insys sales rep turned whistle-blower recorded dozens of conversations of Rowan and other executives and said prosecutors plan to play those tapes at trial. Some of the tapes show his client instructing subordinates to follow the law in pushing doctors to write more or higher-dose Subsys prescriptions, he said. In one snippet of tape, he said, Rowan can be heard saying, “We don’t entice people to speak for us because they write for us. OK? That’s black and white.’’

Simon wasn’t involved in the illegal Subsys marketing and was misled by Burlakoff, Steven Tyrrell, his lawyer, told jurors. “Rich is here because he made one big mistake. He believed and trusted Alec Burlakoff, who we now know, and you will know, is a liar, a bully, a user and manipulator of people,’’ he said.

Lee’s lawyer, Peter Hortsmann, told jurors that prosecutors were objectifying Lee as the only female defendant in the case to make their presentation salacious. The government likes the lap-dance allegation “because it’s sexy, and that’s the only reason,” he said. Lee is a “lightning rod” in the case, Horstmann said.

The case is U.S. v. Kapoor, 16-cr-10343, U.S. District Court, District of Massachusetts (Boston).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net;Janelle Lawrence in Boston federal court at jlawrence62@bloomberg.net;Riley Griffin in New York at rgriffin42@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Jeffrey

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