This past week, a court sentenced the last of seven Insys Therapeutics, Inc. executives for their roles in an opioid racketeering conspiracy. The court sentenced the company’s founder, John Kapoor, to a five-and-a-half-year prison term. Prosecutors called Kappor “the fulcrum” of the criminal agreement to illegally push a fentanyl spray called Subsys.1 Insys marketed the opioid as a treatment for breakthrough cancer pain.
Kapoor received the longest sentence of the seven defendants. Others received sentences ranging from one year to 33 months. For non-cooperating defendants, the court ordered shorter prison terms than what had been requested by prosecutors. For four of those defendants, prosecutors had sought sentences of more than 10 years.2 In particular, prosecutors sought a 15-year sentence for Kapoor, calling him “the only defendant that could not have been replaced by another conspirator.”3
Perhaps most interestingly, the court sentenced two cooperating defendants to longer sentences than prosecutors had requested. Vice President of Sales Alec Burkaloff and former CEO Michael Babich both received sentences six months longer than what the government had wanted. Burkaloff, infamous for dressing as a dancing opioid, received a 26-month prison term for his role in the conspiracy. The court sentence Babich to 30 months. Assistant United States Attorney Fred Wyshak explained that the cooperators’ testimony against their colleagues “virtually guaranteed” convictions.4 The sentencing judge, Judge Allison D. Burroughs, was unconvinced. She stated that Burklahoff “may have done a great societal good, but that was preceded by a great societal evil.”5
Last May, five of the seven indicted executives were found guilty at trial of racketeering, in what has been described as the “first successful prosecution of top pharmaceutical executives” for crimes related to opioids.6 The remaining two executives, Burkaloff and Babich, pleaded guilty shortly before the trial and testified against their former colleagues.7
The Insys executives were found guilty of a years-long criminal conspiracy in which they bribed doctors to prescribe Subsys to patients who did not need the spray, and then lied to insurance providers about the necessity of the product. Burlakoff testified that Insys was “upfront” with doctors about wanting to bribe them for prescribing Subsys.8 He also testified that Kapoor would ask job candidates whether they preferred “loyalty” or “integrity”; the former answer indicated the prospective employee’s willingness to “go along with our scheme to bribe doctors to prescribe Subsys.”9
According to prosecutors, Insys identified practitioners based on the number of opioid prescriptions they wrote.10 The Defendants then offered speaker program bribes to the prescribers who wrote the largest amount of opioid prescriptions, doctors that Insys called “high decile” practitioners.12 Certain sales representatives were recruited based on their connections to high decile practitioners.11 Prosecutors also said that doctors were encouraged to provide increased dosages of Subsys, and were hounded by sales representatives if they did not prescribe enough or high enough dosages of the product.13 The second part of the fraudulent scheme involved running a call center focused on ensuring that insurers paid on the Subsys prescriptions.14 A call center employee testified that she lied to insurers on a daily basis to obtain these payments.15
As this case makes apparent, a great deal of advocacy goes into criminal cases post trial. Parties finding themselves under criminal prosecution should hire attorneys experienced in the complex federal sentencing process.
1 United States’ Sentencing Memorandum in Aid of Sentencing John N. Kapoor (Dkt. 1071), at 1–2.
2 United States’ Consolidated Sentencing Memorandum (Dkt. 1064), at 1.
3 Supra note 1.
4 https://www.law360.com/articles/1236890/insys-vp-who-dressed-as-dancing-opioid-gets-2-years.
5 Id.
6 https://www.justice.gov/usao-ma/pr/founder-and-former-chairman-board-insys-therapeutics-sentenced-66-months-prison.
7 www.law360.com/health/articles/1237076.
8 Supra note 4.
9 Id.
10 Supra note 2, at 5.
11 Id.
12 Government Sentencing Memorandum (Dkt. 1069), at 2.
13 Supra note 2, at 6–7.
14 Id. at 9.
15 Id.
