Insys Therapeutics: bribes to push a fentanyl spray ended in conviction and liquidation

Insys Therapeutics made Subsys, a sublingual fentanyl spray approved only for breakthrough cancer pain in terminal patients. From 2012 the Arizona company pushed it into the far larger chronic-pain market, paying doctors sham 'speaker fees' for events prosecutors described as dinners at restaurants, bars and strip clubs, and misleading insurers about patients' needs. Subsys sales grew into the hundreds of millions of dollars a year; in one example, two New York doctors received nearly $260,000 and wrote $6 million of Subsys prescriptions in 2014.

Founder John Kapoor, once worth $1.8 billion on Forbes' list, personally ran the strategy. He and four executives were convicted in May 2019 of racketeering conspiracy after a 10-week Boston trial that featured a rap video the sales team made about pushing Subsys — the first company boss convicted in a case tied to the opioid crisis. A week after agreeing to a $225 million Justice Department settlement, under which a subsidiary pleaded guilty to five counts of mail fraud, Insys filed Chapter 11 in Delaware on June 10, 2019, the first opioid manufacturer to go bankrupt.

The filing was pitched as a way to 'address legacy legal liabilities' while selling substantially all assets. It never reorganized: a liquidation plan was confirmed on January 16, 2020, all existing shares were cancelled for no consideration, and the residue went to liquidating trusts. Kapoor was sentenced to 66 months in prison and a $250,000 fine on January 23, 2020.

$225M DOJ settlement; hundreds of opioid suits; every share cancelled for no consideration; founder sentenced to 66 months and a $250K fine

Subsys was approved only for breakthrough cancer pain — a market too small to justify Kapoor's ambitions — so management reached for chronic pain patients the drug was never meant to treat.

Sham speaker fees and insurer deception were run as the sales playbook itself, so each quarter of 'growth' compounded criminal exposure rather than building value.

The person setting the illegal incentives was the founder-CEO; there was no internal check that could outrank him.

Litigation costs arrived faster than the cash the scheme had generated: one settlement plus hundreds of civil suits left Chapter 11 liquidation as the only path.

Fraudulent sales channels convert revenue into deferred legal cost: every improperly won prescription accrues a liability that can outlast the product, the company and its shareholders.

Kapoor, 76, was sentenced on January 23, 2020 to 66 months in prison and a $250,000 fine. The liquidating trusts took over winding down the estate's remaining insurance assets and civil claims, and the company was deregistered the same month. The US attorney who prosecuted the case called it conduct that 'prioritised profits over the health of thousands of patients'; the conviction is remembered as the moment US enforcement turned from distributors to the drugmakers themselves.