Big Pharma & RICO

In the past two decades, over 200,000 people have overdosed during the opioid crisis. Now, the criminal justice system has begun holding pharmaceutical and drug distribution companies, as well as their owners and executives, criminally responsible for the national epidemic.

Insys Therapeutics Case

On May 2, 2019, a federal jury found the founder and top executives of Insys Therapeutics, a seller of a fentanyl-based painkiller, guilty of conspiracy under the Racketeer Influenced and Corrupt Organizations Act (RICO) for bribing doctors and other health care providers to sell Subsys, as well as defrauding Medicare and private insurance companies. Each of the defendants faces up to 20 years imprisonment and a fine of up to $250,000.

The following are the names and job titles of the convicted:

  • John N. Kapoor Ph.D., 76, founder and former executive chairman
  • Richard M Simon, 48, former national director of sales
  • Joseph A. Rowan, 45, a former regional sales director
  • Sunrise Lee, 38, a former regional sales director
  • Michael J. Gurry, 55, former vice president of managed markets

Throughout the ten-week trial, federal prosecutors portrayed Insys as engaging in a pattern of racketeering activity through a fraudulent marketing plan they argue was created to propel sales of the company’s painkiller — a┬ámedication spray that is applied under the tongue meant to treat cancer patients—by paying doctors for phony educational lectures to increase brand awareness and writing more prescriptions than necessary (in some cases over $100,000 annually and also sometimes for non-cancer patients), as well as falsely misleading insurers to cover the costly medication.

In one instance, the evidence established that Sunrise Lee, who is a former exotic dancer, gave a doctor a lap dance, hoping it would embolden him to prescribe Subsys. According to the government, the company had practically no limits when it came to sales, even purposefully targeting “pill mills” that have a history of prescribing a significant number of opioids without restrictions.

Similar Cases

On the same day as the Insys verdict, top drug distributor McKesson Corporation made a $37 million settlement to the state of West Virginia after being accused of shipping almost 100 million doses of opioids to state residents in a six-year time span.

Last month, federal courts filed felony drug trafficking charges against Rochester Drug Cooperative, a big pharmaceutical distributor, and two former executives after being accused of shipping tens of millions of oxycodone and fentanyl products to pharmacies that illegally distributed drugs.

Purdue Pharma was sued by the Massachusetts and New York state attorney generals. Additionally, members of the Sackler family who own the company was sued.

Why RICO Charges?

RICO was once limited to traditional organized crime families and activities. However, it has recently been applied to corporate and/or business activity considered to be criminal in nature, specifically due to their alleged exploitative and unethical marketing plans. In this case, the government alleged, and the jury agreed, that the underlying criminal activity included wire fraud, bribery, and illegal drug distribution.

After the Insys conviction in Boston, federal prosecutors may now be more encouraged to continue applying RICO to pharmaceutical companies accused of similar business practices. Because of this, experienced federal defense lawyers will need to remain even more vigilant about, and prepared to aggressively defend, against efforts by the government to overreach and/or attempt to criminalize non-criminal behaviors and/or legitimate business activity.

If you have been charged with racketeering and/or conspiracy associated with prescription drugs, contact Brad Bailey Law and schedule a confidential consultation today.

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