By Nate Raymond

By Nate Raymond


BOSTON (Reuters) - The billionaire founder of drugmaker Insys Therapeutics Inc pleaded not guilty to charges that he participated in a scheme to bribe doctors to prescribe a fentanyl-based spray intended for cancer patients.


John Kapoor, who stepped down as Insys' chief executive officer and chairman in January but remained its majority shareholder, entered his plea in Boston federal court to charges that he had engaged in conspiracies to commit racketeering, mail fraud and wire fraud.


The hearing came after Kapoor, 74, was arrested in Phoenix, Arizona, on Oct. 26. In court papers filed ahead of the hearing, lawyers for Kapoor called the allegations against the billionaire "thin, vague and conclusory."


"He doesn’t believe it's a strong case," Brian Kelly, a lawyer for Kapoor, said in court. "He wants to fight this case."

The charges come amid efforts by U.S. authorities to fight a national opioid addiction epidemic that the U.S. Centers for Disease Control and Prevention say led to over 33,000 deaths in 2015, the latest year for which statistics are available.

The case marked a major escalation of investigations centered on Chandler, Arizona-based Insys' flagship product Subsys, an under-the-tongue spray that contains fentanyl, an addictive synthetic opioid.

Following Kapoor's arrest, Insys on Oct. 29 announced he had resigned from its board and it had recorded $150 million as its best estimate for the minimum amount it would have to pay to settle the U.S. Department of Justice probe.

Kapoor, who founded Insys in 2002, was charged in an indictment that added him as a defendant in a case against six former Insys executives and managers, including ex-Chief Executive Michael Babich, who were initially charged in December 2016.

The indictment said that, beginning in 2012, Kapoor, Babich and others devised a scheme to pay speaker fees and other bribes to medical practitioners to prescribe Subsys and to defraud insurers into approving payment for it.

Federal charges have also been filed in several other states against other ex-Insys employees and medical practitioners who prescribed Subsys.

Insys also faces lawsuits by attorneys general in Arizona and New Jersey. It previously paid $9.45 million to resolve investigations by attorneys general in Oregon, New Hampshire, Illinois and Massachusetts.

(Reporting by Nate Raymond in Boston; Editing by David Gregorio and Bernadette Baum)