TRENTON – Attorney General Christopher S. Porrino announced today that New Jersey has filed an amended consumer fraud and false claims complaint against Insys Therapeutics, Inc. – maker of the powerful opioid-fentanyl drug Subsys – that adds as a defendant John N. Kapoor, billionaire founder of the company.
Insys and Kapoor are accused in the State’s complaint of endangering the public through a greed-driven, unlawful marketing campaign designed to exponentially increase sales of Subsys by making fraudulent claims and unlawfully incentivizing health care providers to prescribe Subsys to an inappropriately broad array of pain patients.
Subsys is only approved by the federal Food and Drug Administration (FDA) for treating breakthrough cancer pain in opioid-tolerant cancer patients.
Filed in Superior Court in Middlesex County, the State’s amended complaint notes that Kapoor not only founded Insys and is its principal shareholder, but also held executive management positions in the company including Executive Chairman of the Board of Directors, President and Chief Executive Officer.
Kapoor’s public claims that he was “not involved in day-to-day operations” concerning Subsys and that he was merely “an investor” in the company are contradicted by documentary evidence, the State’s amended lawsuit notes. The complaint charges that, in reality, Kapoor exercised “firm direction” and “close management” of the illegal push to have Subsys inappropriately – and dangerously – prescribed for patients with routine chronic pain.
“This individual (Kapoor) founded Insys and for all intents and purposes ran the company. We reject the suggestion that he had only a hands-off, observer’s role in the process of illegally expanding the off-label prescription market for his company’s flagship drug Subsys. And, as our amended complaint filed today makes plain, we believe that available evidence suggests otherwise,” Porrino said. “We allege that Mr. Kapoor was firmly at the controls as Insys coldly set aside any concerns about addiction and death, and forged full-steam ahead with a campaign to have more doctors prescribe Subsys to more patients, and to have doctors who were already prescribing the drug prescribe higher doses. Naming him as a direct defendant credits his alleged role in a calculated scheme to drive profits at the expense of human life, and allows us to look beyond the corporate veil and obtain a judgment against Mr. Kapoor and his personal assets.”
Among other things, the State’s amended complaint alleges that the greed of Kapoor and Insys put “hundreds” of lives in jeopardy and “led to the death of at least one New Jersey resident” – a 32-year-old Camden County woman who was prescribed Subsys for fibromyalgia. In addition, the suit notes that two New Jersey state employee health benefits plans paid a total of approximately $10.3 million to reimburse Subsys prescriptions between 2012 and the third-quarter of 2016, while the State Worker’s Compensation Program paid another $300,000.
The lawsuit includes three counts alleging violations of New Jersey’s Consumer Fraud Act and one count alleging violations of the New Jersey False Claims Act. The suit asks that Insys and Kapoor be assessed maximum civil penalties for each violation of the Consumer Fraud Act, and seeks three times the State’s actual damages for violations of the False Claims Act, per that statute. The suit also seeks to have Insys and Kapoor held responsible for costs and fees incurred by the State in bringing the case.
From the 2012 market launch of Subsys until the present, the drug has accounted for approximately 98 percent of net revenues for Insys, a Delaware corporation with headquarters in Chandler, AZ. Insys, which has raised the price of Subsys every year since its launch, sold $74.2 million worth of the drug in New Jersey between 2012 and the third-quarter of 2016.
The State’s complaint alleges that Insys’s corporate decision-makers – led by Kapoor – devised a strategy to expand what they recognized as a limited market for Subsys by aggressively pushing “off label” uses of the drug – even to podiatrists and other specialty practitioners who typically would have little call to treat cancer patients or prescribe powerful Schedule II painkillers. (Off-label use denotes use of a drug for purposes other than that for which it was approved by the FDA.)
Deputy Attorneys General from the Division of Law’s Government and Healthcare Fraud Section – including Section Chief Janine N. Matton, DAG Lara J. Fogel and DAG Evan A. Showell, are handling the Insys matter on behalf of the State.
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