Akorn Chair Resigns, Charged With Bribing To Prescribe Opioids

LAKE FOREST, IL — The chairman of the Lake Forest-based Akorn Pharmaceuticals has resigned after being arrested in Arizona and charged with leading a nationwide conspiracy to bribe doctors to prescribe more opioid nasal spray. Dr. John N. Kapoor resigned as a director and as the board chair of Akorn, Inc., effective immediately, according to a Monday SEC filing from the company.

Kapoor, a billionaire and immigrant from India, was arrested Thursday and charged with racketeering conspiracy, conspiracy to commit mail and wire fraud and conspiracy to violate anti-kickback laws in connection with his role as founder and owner of Insys Therapeutics. Each count carries a sentence of up to 20 years in prison, along with fines.

"[Kapoor's] decision to resign was not a result of any disagreement with the Company on any matter relating to [Akorn's] operations, policies or practices," Akorn's SEC filing said.

Insys marketed "Subsys" a nasal spray containing fentayl – a powerful narcotic and highly addictive opioid – intended for patients with cancer. But federal prosecutors say Kapoor led a scheme to bribe doctors to prescribe the drug to patients that do not have cancer.

According to the indictment, Kapoor and at least six other former executives conspired to mislead insurance providers when they became skeptical about the drug being prescribed to so many non-cancer patients. To avoid scrutiny, prosecutors said the pharmaceutical company set up a special unit to get pre-approval from insurer and benefit managers.

Kapoor and his fellow executives put "profit before patient safety," said Susan Hensley, a regional director of the U.S. Department of Labor, Employee Benefits Security administration. She promised to work closely with law enforcement to "to protect participants in private sector health plans and contribute in fighting the opioid epidemic.”

More: Billionaire Bribed Doctors To Prescribe Deadly Opioid: Feds

Officials warned the leadership of other pharmaceutical companies that they are in the sights of the government for allegedly contributing to the current opioid crisis.

"We must hold the industry and its leadership accountable - just as we would the cartels or a street-level drug dealer,” said William D. Weinreb, the acting U.S. attorney for Massachusetts. "In the midst of a nationwide opioid epidemic that has reached crisis proportions, Mr. Kapoor and his company stand accused of bribing doctors to overprescribe a potent opioid and committing fraud on insurance companies solely for profit.”

Boston's top FBI agent, Harold Shaw, said the charges mark an important step in holding drug companies responsible for their role in fueling the opiod crisis, which has been declared a public health emergency by President Donald Trump. Shaw said the Insys executives established a corporate culture where lies and bribery were "an acceptable business practice."

“The allegations of selling a highly addictive opioid cancer pain drug to patients who did not have cancer, make them no better than street-level drug dealers," Shaw said, describing the charges as "an important step in holding pharmaceutical executives responsible for their part in the opioid crisis."

Kapoor had served as chairman of Akorn since 1990, the same year he founded Insys. According to Forbes, he owns nearly 70 percent of shares in Insys and has a net worth of $1.71 billion, making him the 1,234th richest person in the world.

A $4.3 billion deal to sell Akorn to the Germany-based health care company Fresenius Kabi has been approved by shareholders and, if accepted by regulators, it is expected to be finalized in early 2018.

Bail for Kapoor has been set at $1 million, he has been ordered to undergo electronic monitoring and surrender his passports.

_{Photo: Billionaire founder of Insys Therapeutics John Kapoor leaves U.S. District Court after being arrested earlier Thursday, Oct. 26, 2017, in Phoenix. Kapoor and other defendants in the fraud and racketeering case are accused of offering bribes to doctors to write large numbers of prescriptions for a fentanyl-based pain medication meant only for cancer patients with severe pain. (AP Photo/Ross D. Franklin)}