Worse Than Theranos

Insys Therapeutics founder John N. Kapoor leaves federal court in Boston on March 13, 2019. Photo: Pat Greenhouse/Boston Globe via Getty Images

In early December, while Elizabeth Holmes was testifying in her own defense in the most heavily covered white-collar criminal trial in recent memory, an entirely different criminal proceeding involving the health-care industry was taking place across the country.

Thomas Whitten, a 71-year-old former doctor, was sentenced to nearly five years in prison for his role in overprescribing a fentanyl spray known as Subsys that is administered under the tongue. It led one patient to believe he “was going crazy” from hallucinations and caused “literally three or four” of his teeth to fall out while at work one day. Another patient eventually had “a breakdown” and “drove off” and left her kids on Christmas, while still another said that she would wake up “at night screaming” and that the police had to be called multiple times because of her hallucinogenic episodes. The product was eventually linked to hundreds of deaths.

It was the latest development in a yearslong prosecutorial effort that has never broken through in the public consciousness in quite the same way as the Holmes and Theranos spectacle despite being worse in virtually every way that matters. The difference reflects some unfortunate tendencies among the press — and to some extent, the public itself — regarding the sorts of stories that attract the most attention and the most sustained coverage, as well as the sorts of people and industries most likely to generate elite-tabloid coverage in the mainstream press.

When Whitten pleaded guilty over the summer, he admitted he had accepted kickbacks from a company called Insys Therapeutics for two and a half years beginning in May 2013 in exchange for prescribing Subsys, which had been approved by the Food and Drug Administration in 2012 for “breakthrough cancer pain” experienced by patients already suffering from long-term pain related to the disease. Subsys is highly potent and highly addictive — fentanyl is 50 to 100 times more powerful than morphine — and, as the government put it in its sentencing submission, Whitten had prescribed the drug “in exceptionally high quantities to patients not suffering from breakthrough cancer pain,” and he did it “not for a legitimate medical purpose” but because he had received about $118,000 from Insys. All told, he prescribed more than $5 million worth of the drug that was paid through Medicaid and Medicare alone.

The saga of Insys is just one part of the much larger opioid epidemic in the country, the broad contours of which are now widely acknowledged. In November, the federal government published provisional data indicating that a record number of people — more than 100,000 — had died from drug overdoses in a 12-month period. About two-thirds of them were attributed to synthetic opioids including fentanyl. The cost of prescription-opioid misuse alone has been estimated at $78.5 billion a year, including in lost productivity and costs to the criminal-justice system.

The Insys story is a particularly insidious one. The facts began to take shape publicly in 2015 after a number of employees filed whistleblower lawsuits in which the plaintiffs allege fraud against the government and receive a portion of any monetary recovery. An assortment of state and federal investigators began to look more closely at the company’s practices. Eventually, federal prosecutors in Boston obtained an indictment of seven former company executives and managers including the company’s CEO, Michael Babich; a sales executive named Alec Burlakoff; and the company’s founder, John Kapoor. Babich and Burlakoff pleaded guilty before the trial, which ended in 2019 with all five of the remaining defendants being convicted.

They were accused of racketeering based on a kickback scheme in which the company paid practitioners to prescribe Subsys. It began in mid-2012 and involved targeting pain-management specialists who prescribed opiates at high rates with payments through a “speaker program.” Under the program, practitioners would get paid for convening programs in which they presented information on Subsys to other health-care providers as part of an effort that was supposed to be educational, at least nominally. The “speakers” received between $1,000 and $3,000 for each event — with an annual cap on payments for each participant that would eventually reach $125,000 per year — but the events were largely shams.

In fact, Insys tracked and compensated the participants based on how many prescriptions they wrote, including a particularly profitable group that Burlakoff referred to as “whales,” who had agreed that they would get more fees if they prescribed more Subsys. In some cases, the only attendees were the speaker, a guest, and an Insys representative, but even when other people showed up, the events (often dinners) were simply excuses to pay the practitioner in what the appeals court called “vehicles for bribes to physicians” in a “a pay-for-play fandango.” The program was extremely effective in driving sales: The company’s market cap eventually exceeded $3 billion, and Kapoor made the Forbes billionaire list in October 2013.

Kapoor was sentenced to 66 months in prison, while the rest received sentences ranging from about a year to 33 months. The lowest sentence went to a regional sales manager who had been hired after Burlakoff met her at a strip club. She had no experience in management or the pharmaceutical industry, and based on information produced at the trial, it seems she may have been running an escort business on the side.

All of the convictions were affirmed last summer by a plainly disgusted appellate panel. The judges called the case “a chilling tale of suffering that did not need to happen” involving “a group of pharmaceutical executives who chose to shunt medical necessity to one side and shamelessly proceeded to exploit the sickest and most vulnerable among us — all in an effort to fatten the bottom line and pad their own pockets.”

The Insys case happens to be the rare white-collar criminal investigation from the Trump years that is hard to fault. There was the usual large monetary settlement with the company, or what was left of it before it went into bankruptcy. In addition to securing convictions against the company’s founder and CEO, prosecutors throughout the country successfully prosecuted low-level (but still culpable) employees, along with more than a dozen health-care providers — not everyone, to be sure, but enough to provide a meaningful deterrent effect, which is an important part of trying to make the most of our country’s under-resourced white-collar-enforcement regime.

It was definitely not a regular occurrence during the largely aimless and inept efforts of the Trump Justice Department. In the final weeks of the 2020 election, the Trump DOJ cut a favorable deal with the Sackler family as part of a settlement that resolved criminal and civil investigations into Purdue Pharma. There is no indication anyone in the family will be charged. Unlike for Kapoor, there appears to be a shortage of evidence that clearly ties members of the family to the day-to-day marketing of Oxycontin.

Objectively, the effects of the Insys scandal were much worse than the consequences of the Theranos debacle, which, while unfortunate for many customers who received inaccurate blood tests — one of them received a result that may have indicated that she had HIV — did not result in any identifiable deaths or the sorts of disturbing stories that emerged during the trial of Kapoor and his co-defendants. One patient testified that she had a “hard time functioning, standing up, going to sleep” and that Subsys harmed her ability “to get up, out of bed, get dressed, and do anything.” Another said that when he could not get his hands on Subsys, he would sometimes curl up “into a fetal position” while “burn[ing] up with fever.” Like the man whose teeth fell out at work and the woman who fled her kids on Christmas, both patients said they did not have cancer at the time they were using Subsys. (Another element of the criminal misconduct at Insys involved helping practitioners lie to insurers about patients’ diagnoses in order to get their prescriptions approved.)

Of course, Insys did not become the household name Theranos has become. Major outlets like the New York Times and The Wall Street Journal covered big developments in Insys’ investigation and prosecutions, PBS’s Frontline did an episode on it in 2020, and The New York Times Magazine published a lengthy piece several years ago by a writer who has just finished a book on the company. But the story never approached anything like the full-fledged national spectacle of the Holmes drama, which included regular dispatches from reporters who waited in line each morning to get a seat at the trial, post-verdict reflections on “what it was like” for those who covered the trial, and a slew of high-profile media projects based on the scandal.

The disparate reception is likely due to a variety of factors — some justifiable, others less so. Some of the reporters who devoted their lives in recent years to covering the minutiae of the Holmes case — at times a lucrative undertaking by the standards of the profession these days — have overstated the substantive stakes of the case, though on some level, this has probably not been lost on people. The absence of any life-or-death consequences stemming from the conduct at Theranos may have actually made it more appealing on some level — a relatively guiltless indulgence, as I have called it, for the media (including yours truly) and the many members of the public who have followed it in the press.

The media loves stories about well-to-do white people, spectacular flameouts, and itself, and the Holmes saga brought together all of those elements. She was a beguiling figure who had seemingly reached the upper echelon of society — the rarefied space of business, political, and media elites — but in the end, the coverage was shaped by those same interests.

Meanwhile, many of the worst white-collar cases tend to be a decidedly more down-market affair: regular people, life-altering consequences, no magazine covers. They look a lot more like Insys than Theranos.

Worse Than Theranos