Dirty Dozen Revisted – #7 – Pharmaceutical corruption at its best
This story focuses on John Kapoor, the infamous founder of Insys Therapeutics. Another villain of the pharmaceutical industry. He and his company caused the deaths of over 8,000 Americans. Despite this, he became one of America’s 400 richest men. This offense was driven by greed. It ignored the laws meant to ensure proper medication use.
Bribe and prescribe
In 2012, the Food and Drug Administration approved the use of a fentanyl drug called Subsys. It was approved for cancer patients in pain who were resistant to other opioids. You may be familiar with fentanyl. It is the drug that killed Michael Jackson.
Kapoor, his CEO and VP of Sales, were unhappy with early sales. The stringent prescribing rules from the FDA were a significant issue. So, he devised a plan. He wanted to bribe and charm doctors to write prescriptions for Subsys. The sales team was encouraged to bribe willing doctors. They offered money, gifts, trips to strip clubs, gambling holidays, and more.
Insys paid more than $1 million to eight doctors. This was to boost prescriptions for the drug. This drug costs up to $19,000 each month for every patient. The plan pretended to pay doctors to teach others, known as speaker programs. In reality, it was just a way to funnel money for lavish dinners. It even involved one doctor receiving sexual favors.
The scheme fueled the company’s meteoric rise in share price and Kapoor’s personal wealth. Unfortunately, it also resulted in the addiction of many patients to opioid medications.
Insys rationalized that if they got a patient on the drug, over time, they would need higher and higher dose. That meant increased sales. It was a time when the appetite for opioids, whether legitimate or not, was flourishing.
Go after the whales, not the small fish
They targeted a small group of doctors willing to prescribe the drug off-label, rather than trying to reach many. Doctors can use a loophole in FDA rules to prescribe a drug for almost any unapproved reason.
Salespeople were heavily incentivized to sign up doctors. They aimed to have them prescribe more scripts and at higher doses. They were called “Whales” and would write up to $30,000 in scripts per patient per month.
Sales reps who looked good were hired. Doctors didn’t want someone unattractive coming through their doors. Kapoor promoted a “low-cost model” for the company. This plan had low starting salaries for entry-level sales reps. However, they could earn unlimited bonuses. It was described as an “eat when you kill philosophy”; when you sell a lot, you make a lot.”
It was not uncommon for the successful reps to make hundreds of thousands in incentives. One employee said that breaking the law for Insys made him a millionaire by age 26. He achieved this in just four years with the company.
Corrupt to the core
Kapoor approved a plan for their call center. They would contact insurers using blocked phone numbers. This meant changing the caller ID from a 602-area code to a number that showed all zeros. Prosecutors say this let reps pretend they were calling from doctors’ offices.
Employees often lied to insurance companies. They were taught to “ride the gray line” between truth and fiction. This helped them get costly fentanyl prescriptions approved.
The government also claims Insys defrauded insurance companies. A prescription for 60 sprays costs over $2,000. The total loss to insurance companies from the scam reached about $48 million.
John Kapoor and four other executives were guilty of racketeering conspiracy. They received different sentences. Kapoor got a five-year sentence, but he was released after two and a half years. Hardly a just decision, considering the effect he had on so many lives.
The Insys story teaches us many lessons. First, there’s the misuse of doctors’ personal data. Then, there are inappropriate programs that acted like a bribery campaign. Also, there was insider trading that occurred, showing a total disregard for compliance.
Some say founder Kapoor was ‘a bad apple’ while others were just ‘lambs to the slaughter.’ I believe it’s more complicated than that. Insys had a toxic culture. Kapoor started it, and many executives kept it going. They were all focused on getting rich, no matter the cost.
The company had a toxic culture. They mistreated employees and ignored warning signs. They also showed little care for the safety and welfare of patients.
Companies like this have hurt the reputation of pharma companies. This damage is significant, to say the least.
“But it happens in all companies,” you say. Agreed, but there is always something more sinister when it is a company dealing with human lives.
[Author’s note: Pain Hustlers is the Netflix dramatization based on the Insys story. It is a very good. Starring Andy Garcia. Emily Blunt and Chris Evans.]
Till next time
Calvin
