Insys Therapeutics

Insys Therapeutics

Company type	Public
Industry	Pharmaceutical
Founded	1990
Founder	John Kapoor
Defunct	2019
Fate	Bankruptcy following legal issues and settlement
Headquarters	Chandler, Arizona , United States
Products	Subsys, Syndros

Insys Therapeutics was a U.S.-based specialty pharmaceutical firm established in 1990, with its headquarters located in Chandler, Arizona. The company’s flagship product was Subsys, a sublingual liquid form of fentanyl, a powerful opioid prescribed to alleviate breakthrough cancer pain when other treatments proved ineffective. Insys concentrated its business efforts on rapid-onset opioid therapies, serving a specialized segment within oncology-related pain management.

During its final years, Insys encountered major legal issues connected to the opioid crisis, including accusations of bribery and deceptive marketing tactics. Several top executives, notably founder John Kapoor, were found guilty of racketeering in 2019. That same year, the company declared bankruptcy shortly after settling with the U.S. Justice Department for $225 million to resolve both criminal and civil allegations.

The company’s dramatic ascent and downfall are portrayed in the 2023 movie Pain Hustlers.

Products

In addition to Subsys, Insys offered Syndros, an FDA-approved synthetic THC formulation recognized as the first liquid THC medication. Syndros is categorized as a Schedule II drug and is prescribed to treat AIDS-related anorexia and chemotherapy-induced nausea that does not respond to conventional therapies. Insys was also advancing other cannabis-based products, capitalizing on its foothold in the emerging medical cannabinoid sector despite regulatory obstacles stemming from THC’s Schedule I classification under the Controlled Substances Act.

History

Insys Therapeutics was founded in 1990 by American businessman John Kapoor, who later assumed the roles of CEO and president following the arrest of former CEO Michael Babich. Kapoor stepped down in 2017 amid charges related to racketeering conspiracy and was succeeded by Saeed Motahari.

The company employed aggressive promotional tactics, such as compensating physicians with speaking fees to endorse Subsys. To facilitate insurance approvals for Subsys prescriptions, Insys created the Insys Reimbursement Center, which frequently misrepresented patient qualifications despite Subsys being intended strictly for cancer-related pain. These practices were revealed in a whistleblower lawsuit filed in 2012; however, government authorities initially chose not to pursue action.

Insys launched its initial public offering (IPO) in March 2013, achieving the highest-performing IPO of that year despite ongoing legal challenges and allegations. By 2016, Insys had climbed to No. 52 on Deloitte’s Fast 500 North America list, reflecting substantial growth.

In 2017, U.S. Senator Claire McCaskill published a report that included recordings of an Insys employee impersonating a medical office to circumvent prescribing regulations for Subsys; this incident contributed to heightened legal scrutiny following a patient fatality linked to improper medication use. Attorney Richard J. Hollawell secured critical evidence through subpoena during related civil proceedings.

Research conducted by physician Scott Hadland demonstrated that Insys was responsible for half of all opioid marketing spending directed at doctors, highlighting its significant market dominance. This study was referenced during federal court proceedings that led to the conviction of Kapoor and other executives on racketeering conspiracy charges, marking a pivotal point in both the company’s financial performance and legal challenges.

Political advocacy

In 2016, Insys contributed $500,000 to Arizonans for Responsible Drug Policy, an organization opposing a marijuana legalization measure on the Arizona ballot. Investor disclosures indicated the company was apprehensive about how legalization might affect sales of a cannabis-derived medication it was developing. While the public rationale for opposing the initiative focused on child protection, advocates for medical marijuana criticized Insys for what they saw as profit-driven hypocrisy, given the company's development of cannabis-based products. The campaign emphasized Insys' collaboration with local groups in defeating Proposition 205, which was ultimately rejected by 51.32% of voters.

Litigation and bankruptcy

In December 2016, charges were brought against seven former Insys executives, including CEO John Kapoor, accusing them of conspiring to bribe medical professionals to prescribe a particular pain treatment. This case attracted nationwide media attention, featuring an NBC special report in June 2017.

By August 2017, Arizona Attorney General Mark Brnovich filed a lawsuit against Insys, alleging that the company misled patients and insurers regarding Subsys by submitting false claims to obtain payments and misrepresenting patient diagnoses. Insys countered by stating these accusations pertained to ex-employees no longer affiliated with the firm.

In October 2017, founder John Kapoor was arrested and faced charges including RICO conspiracy, wire fraud, and violations of anti-kickback laws linked to illegal efforts aimed at increasing Subsys prescriptions.

Former CEO Michael Babich pleaded guilty in December 2018 to conspiracy and mail fraud connected to bribery schemes. In April 2019, former sales VP Alec Burlakoff reached a $9.5 million settlement with Arizona over his involvement in paying physicians "speaking fees" to promote Subsys prescriptions; he consented to testify against Insys and is prohibited from engaging in pharmaceutical sales within Arizona.

On May 2, 2019, a federal jury convicted Kapoor along with four other senior executives of racketeering for bribing doctors and deceiving insurers to enhance Subsys sales. Those convicted included Richard M. Simon (national sales director), Sunrise Lee and Joseph A. Rowan (regional sales directors), and Michael J. Gurry (vice president of managed markets). In June 2019, Insys agreed to a $225 million settlement resolving federal criminal and civil probes into its marketing activities. Kapoor received a prison sentence of five and a half years in January 2020.

Insys filed for bankruptcy protection in Delaware on June 10, 2019. CEO Andrew Long attributed this decision primarily to ongoing extensive litigation and decreasing revenues from Subsys. The bankruptcy filing followed the $225 million settlement with the U.S. Department of Justice, which recognized an unsecured claim amounting to $190 million related to the case.

See also

• The Crime of the Century