U.S. judge questions scope of indictment against Insys founder

BOSTON (Reuters) – A federal judge on Tuesday expressed concern about the scope of an indictment against several former Insys Therapeutics Inc (INSY.O) executives accused of bribing doctors to prescribe an opioid and suggested U.S. prosecutors streamline the case to avoid its dismissal.

  • FILE PHOTO: The billionaire founder of Insys Therapeutics Inc. John Kapoor, exits the federal court house after a bail hearing in Phoenix, Arizona , U.S., October 27, 2017. REUTERS/Conor Ralph/File Photo
  • U.S. District Judge Allison Burroughs in Boston said she believed the indictment did not contain enough allegations to support a racketeering conspiracy charge against billionaire Insys founder John Kapoor and six other former executives and managers.

    “The indictment has a core of conduct that’s problematic and may be criminal,” Burroughs said during a hearing. “I don’t know, that’s what a trial is for. But I’m have having difficultly with the way it’s laid out.”

    The indictment charges Kapoor, former Insys Chief Executive Michael Babich and others with conspiring since 2012 to pay bribes to doctors to prescribe the drugmaker’s fentanyl-based cancer pain medication Subsys and to defraud insurers.

    Burroughs said she believed the indictment lacked sufficient allegations to establish a relationship between the Insys executives and the various doctors accused of taking bribes that would legally support the racketeering charge.

    She made the comments as Beth Wilkinson, Kapoor’s lawyer, urged Burroughs to dismiss the case, saying prosecutors seeking to bring a big opioid epidemic-related case under the Racketeer Influenced and Corrupt Organizations Act had overreached.

    “They’re getting pressure to show they’re being tough on the opioid crisis,” she said. “We don’t have to guess why they did it.”

    Burroughs did not rule. But she said prosecutors should look at whether the case could be “streamlined and clarified” as she did not want to dismiss the charges due to a lack of evidence. A trial is scheduled for January.

    Subsys is an under-the-tongue spray containing fentanyl, an opioid 100 times stronger than morphine. It won U.S. regulatory approval in 2012 for use in managing pain in cancer patients.

    The U.S. Justice Department has accused Insys of paying kickbacks to doctors to prescribe Subsys, often via fees to participate in sham speaker programs ostensibly meant to educate medical professionals about the drug.

    Kapoor was indicted in October and added as a defendant in a case against six other people, including Babich, who were first charged in December 2016.

    Other defendants include Alec Burlakoff and Michael Gurry, former Insys vice presidents, former National Sales Director Richard Simon, and Sunrise Lee and Joseph Rowan, former regional sales directors. They also have pleaded not guilty.

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