U.S. to narrow opioid bribe case against Insys founder, others

BOSTON (Reuters) - U.S. prosecutors on Tuesday said they will narrow a case against several former Insys Therapeutics Inc executives accused of bribing doctors to prescribe a potent opioid after a federal judge questioned the scope of the indictment charging them.

FILE PHOTO: The billionaire founder of Insys Therapeutics Inc. John Kapoor, exits the federal court house after a bail hearing in Phoenix, Arizona , U.S., October 27, 2017. REUTERS/Conor Ralph/File Photo

Federal prosecutors in Boston, in a court filing, said they plan to seek a revised indictment against billionaire Insys (INSY.O) founder John Kapoor and six former executives and managers that will “streamline” the case by including fewer charges.

Prosecutors did not say what charges the new indictment would include. The defendants currently face charges including racketeering conspiracy, mail fraud conspiracy and wire fraud conspiracy.

But prosecutors said they were “mindful of concerns” raised during a July 17 hearing by U.S. District Judge Allison Burroughs, who questioned whether prosecutors could prove the racketeering conspiracy count as charged.

The indictment charged Kapoor, former Insys Chief Executive Michael Babich and others with conspiring since 2012 to pay bribes to doctors to prescribe the drugmaker’s fentanyl-based cancer pain medication Subsys and to defraud insurers.

Burroughs said she believed the indictment lacked sufficient allegations tying together the Insys executives and the various doctors to support the racketeering charge.

Burroughs also said that prosecutors should look at whether the case could be “streamlined and clarified.”

“The indictment has a core of conduct that’s problematic and may be criminal,” Burroughs said. “I don’t know, that’s what a trial is for. But I’m have having difficultly with the way it’s laid out.”

Beth Wilkinson, a lawyer for Kapoor, said prosecutors appeared to have decided they would rather obtain a new indictment than risk the case’s dismissal.

“But the government’s vague proposal cannot fix the indictment’s fundamental flaws,” she said in a statement.

Subsys is an under-the-tongue spray intended for managing pain in cancer patients that contains fentanyl, an opioid 100 times stronger than morphine.

The U.S. Justice Department has accused Insys of paying kickbacks to doctors to prescribe Subsys, often via fees to participate in sham speaker programs ostensibly meant to educate medical professionals about the drug.

Kapoor was indicted in October and added as a defendant in a case against six other people, including Babich, who were first charged in December 2016.

Other defendants include former Insys vice presidents Alec Burlakoff and Michael Gurry, former National Sales Director Richard Simon, and Sunrise Lee and Joseph Rowan, former regional sales directors. They also have pleaded not guilty.

Reporting by Nate Raymond in Boston; editing by Jonathan Oatis and Bill Berkrot

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