Wednesday, April 8, 2020

Insys Theraputics: Exotic Dancers and Money Bribery Leads Opioid Manufacturer Insys Therapeutics to File for Bankruptcy (2012-2015)

Ethics Case Controversy

Insys Therapeutics, an American pharmaceutical company, recently filed for bankruptcy as a result of having to pay $225 million in settlement. This settlement is a result of Insys Therapeutics bribing doctors to prescribe their highly addictive pain killer Subsys along with insurance companies to cover the charges of this drugInsys Therapeutics used bribery tactics such as hiring an exotic dancer as a sales representative to persuade doctors in prescribing their patients Subsys as much as possible, even if they didn’t have cancer related pain, which was the drugs intended use. Not only that, but Insys Therapeutics also paid these doctors large cash payments as a form of bribery at their “speaker programs,” which were intended to be used as a way to teach these doctors about Subsys through lunches and dinners. The actual reasoning for these lunches and dinners, however, were to be used as a coverup in order to pay these doctors bribes to get them to increase the amount of Subsys prescribed as well as to increase the dosage of Subsys prescribed.
John Kapoor
On top of having to pay $225 million in settlement, Insys Therapeutics' top executives were  all individually charged. CEO and founder John Kapoor was sentenced to five and a half years in prison on racketeering chargers and was ordered to pay $250,000 for his role in this fraudulent bribery scheme that contributed to the opioid epidemic. Not only that, but former vice president of sales Alec Burlakoff was sentenced to twenty-six months in prison after pleading guilty in federal court to racketeering conspiracy and his role in this case as well. Former CEO Michael Babich was also sentenced to thirty months in jail after pleading guilty in federal court to conspiracy and mail fraud charges.Too add, Michael Gurry, who was Insys Therapeutics' former vice president, and former national sales director Richard Simon, were both sentenced to thirty-three months in prison. Besides these executives, former regional sales manager Joseph Rowan received twenty-seven months in jail along with Sunrise Lee, who was the exotic dancer hired as a sales representative, and was sentenced one year and one day for her part in the scandal. Besides Insys Therapeutics employees and higher up management, doctor Gordon Freedman was charged with accepting more than $300,000 from Insys . Gordon is just one of the many doctors who were charged with accepting money from Insys Therapeutics.
U.S. Attorney Andrew Lelling gives this quote in a statement that really stuck with me: “Just as we would street-level drug dealers, we will hold pharmaceutical executives responsible for fueling the opioid epidemic by recklessly and illegally distributing these drugs, especially while conspiring to commit racketeering along the way." This statement is extremely important to think about because if there is a drug dealer on the streets, selling and distributing drugs, getting people addicted to opioids and other types of drugs, pharmaceutical companies involved in fueling the opioid epidemic by getting individuals addicted to their drugs for monetary gain should also be held accountable. This case sets the tone for other pharmaceutical companies and shows them that these types of actions will not be tolerated.


When it comes to who the stakeholders are for this case, or who was directly affected by
Jeffrey Buchalter
these business decisions, first we have the individuals prescribed Subsys. As a result of this business decision, many individuals became addicted to opioids and lives were lost for the use of this potent drug. Specifically, we have Sarah Fuller, a thirty-two-year-old woman who was found dead in her bedroom as a result of a lethal amount of fentanyl in her blood from Subsys and Jeffrey Buchalter who was an IRAQ war veteran who survived multiple bomb blasts and as a result of his pain, was put on Subsys and became severely addicted. Next, we have the doctors were bribed during this case. As a result of this business decision, doctors were becoming richer and richer as they prescribed Subsys to their patients by lying to insurance companies about the actual health status of their patients, but also lost their trust with patients which outweighs the money in the long run.Workers of Insys Therapeutics and higherup management were also affected by this business decision and as a result are a stakeholder. As a result of this business decision, some workers of Insys Therapeutics were affected because they were getting commission from pushing insurance companies
Sarah Fuller
to approve Subsys, but, many employees lost their job as a result of this business decision. As for higher up management of Insys Therapeutics, they were making large amounts of money from their untruthful acts. Lastly, we have society as a whole who is a major stakeholder. Because of this business decision, the opioid epidemic became even worse, resulting in society suffering from many losses and overdoses. If there is a silver lining in all of this, however, as a result of this business decision, the government is cracking down on these big pharmaceutical companies’ tactics on selling their drugs as a way to prevent the opioid epidemic from growing.

Ethical Theories


An individualistic thinker would not be in favor of the Insys Therapeutics case above. According to Milton Friedman, an individualistic thinker, the only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders within the law of the land. Although Insys Therapeutics was trying to maximize profits and make as much money as possible for their owners and stockholders, they did so in an illegal way, making their actions not “within the law of the land.” Specifically, these employees were charged with mail fraud, bribery, kickbacks and racketeering, which Milton Freidman would have been against. Not only would Freidman be against this case, but Tibor Machan, another individualistic thinker, would also be against this case. Like reasoning for Friedman’s theory, because Insys Therapeutics did not act within the law of the land, this also goes against Machan’s theory. Not only that, but Insys Therapeutics indirect goals, which were to bribe doctors and insurance companies, was solely aimed at profiting which goes completely against what Machan believed. Lastly, Insys Therapeutics lost its owners and stockholders a lot of money as a result of the company filing for bankruptcy for their illegal actions. This goes against an individual thinker because Insys Therapeutics is not maximizing profit here for its owners and stockholders. In fact, they are doing more harm than good. Because Insys Therapeutics was so worried about making a lot of money in a short amount of time in unlawful ways, profit was not maximized and an individualistic thinker would not be in favor of this case.


If you were to look at this case in short-term, then a utilitarian thinker would be in favor of this case. Patients are happy since they feel less pain and Insys Therapeutics workers and stockholders would be happy since they are maximizing profits. Because Utilitarianism focuses on happiness in the long-run, however, a utilitarian thinker would be against this case. The fundamental rule of Utilitarianism focuses on maximizing pleasure and minimizing pain with a complete stakeholder approach, however, Insys Therapeutics paid more attention on making a lot of money quickly versus the safety and happiness of its stakeholders and patients, thus violating this rule. John Stuart Mill, a utilitarian thinker, believed that “we out to bring about happiness and pleasure in all beings capable of feeling it and if happiness is valuable, there is no difference morally speaking between my happiness and yours” (Salazar). With that being said, the Insys Therapeutics case would go against this idea because the owners and higher up business professionals were only worried about their own happiness, not the happiness of its patients. The actions of Insys Therapeutics brought happiness to these professionals because they were making a lot of money off of the briberies and kickbacks, however, the patients were very much unhappy since they because addicted to the highly potent drug and even died as a result of these actions. Because of this, a Utilitarian thinker would be against this case. Because Insys Therapeutics was only concerned about short-term happiness, they did not understand the negative long-term effects from their actions, which goes against this ethical theory.


A Kantian thinking would definitely be concerned with what is going on with this case here. First of all, under the Kantian theory, “you must never deceive or harm people, or otherwise use them for your own personal gain” (Salazar). In the case above, customers were not only being deceived and lied to by Insys Therapeutics, but they were being harmed by the inaccurate prescription of the drug, all for the company’s own personal gain. Because Insys Therapeutics were knowingly deceiving their customers and people in general all for their own personal gain, a Kantian thinker would not like this case. To add to this, Insys Therapeutics was treating patients as mere means. What this means is that these patients were only being use to help the company make more money and not to truthfully administer the drug to patients and make money in the process. Sarah Fuller’s case is a perfect example of a patient being used as mere means. Sarah was prescribed Subsys for neck and back pain, which is pain not related to cancer. Insys therapeutics wanted to make money off of their patients in a non-truthful matter since they did not care that Sarah did not have cancer pain and prescribed the drug anyways. These patients were also being lied to and deceived through wrongfully being prescribed Subsys as well as Insys Therapeutics not disclosing just how potent and dangerous their drug was.

Virtue Theory

A virtue theorist believes that character traits promote wellness or flourishing of individuals within a society (Salazar). Not only that, but they believe that “individuals must act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits” (Salazar). With that in mind, the Insys Therapeutics case goes against what a virtue theorist believes in. Compared to the previous three theories, they all look at individuals’ actions where virtue theorists look at the character traits of the individuals. For the Insys Therapeutics case, John Kapoor, founder of Insys Therapeutics and master mind behind this scandal, lacked many virtues such as caring and compassion. Kapoor did not care about the patients his drug could help nor did he have compassion for his employees with the potential outcome from his actions, he only cared about making money and doing so in a dishonest way, such as bribing doctors and insurance companies. Not only did he lack these virtues, but he held vices such as selfishness and greed for only caring about himself and flourishing in terms of making the most money for himself. As a result, what John Kapoor and Insys Therapeutics executives did violated what a virtue theorist believed in. These individuals’ character was detrimental to the case and overall lead to the company filing for bankruptcy and executives going to jail.

Justified Evaluation

Overall, Insys Therapeutics actions were unethical and the outcome is what needed to be done. Bribing doctors and insurance companies for your own personal gain is heartless. When a patient goes to their doctor for care, they trust that the correct action plan is being put forth for them, however, in this situation and case, patients were steered down the incorrect path by people who they were supposed to be able to trust. Unfortunately, Insys Therapeutics and the doctors accepting their bribes were so focused on making a large amount of money in the short-run that they did not even consider what could happen as a result in the long run. These doctors should have denied the bribes and reported Insys Therapeutics immediately. Not only that, but the employees and higher up management shouldn’t have been bribing these doctors and insurance companies in the first place. They should have trusted the process and made money while treating these patients accurately and truthfully. The Insys Therapeutics case violated all of the ethical theories in my opinion, as stated above. These greedy and dishonest individuals only cared about themselves and making large amounts of money through illegal actions and deceiving people, causing for a lot of unhappiness.

Company Action Plan

As for the company's next form of action, some major changes that need to be put in place are a new mission statement, new core values to follow, heavy monitoring of the company in the future, as well as heavy marketing strategies. As of right now, Insys Therapeutics’ mission statement is “to improve the quality of patient care by building a specialty pharmaceutical company focused on cannabinoids and novel drug delivery systems that address unmet patient needs” (Insys Therapeutics). I recommend that a new mission statement should be “to improve the lives of patients through honesty, technology, and innovation.” This new mission statement shows customers that Insys Therapeutics is committed in helping their customers honestly through their new innovative technologies.When it comes to core values for Insys Therapeutics, they must exemplify consistency, honesty, innovation, and respect when rebooting their company. Consistency is important because Patients want to know that they are being treated the same and for the right reason every time they are prescribed a drug. By being consistent, people are more likely to trust the company and use their drugs. Honesty is important because. Nobody likes to be lied to, especially when it comes to being prescribed medication. When a customer feels deceived, they are less likely to come back and do business with a company. Because of this, Insys Therapeutics must be extremely honest to their patients about the potency of their drug and not try and do anything that would cause patients to lose their trust. With innovation, new diseases are coming into the picture, so innovation is essential for Insys Therapeutics. Customers need to know that Insys Therapeutics will continue to provide the best and most effective medications to accurately and effectively treat patients. Lastly, By showing respect to customers along with patients, they will feel as if they are not just a money sign. This will cause for individuals to do more business with Insys Therapeutics, ultimately, making them successful in the future.

Besides a new mission statement and improved core values, the company also should improve the Subsys applicator by limiting the amount of sprays a patient can

administer to ensure that less overdoses will occur with this drug. They also should monitor who is being administered Subsys and for what reasons to make sure that not too many people are being prscribed this drug and to ensure its for the right reasons. It is also important for Insys Therapeutics to hire all new higher up management and ceos so that customers know that the individuals who were a part of this crime will not be working for this company again. Also, Insys Therapeutics should change their company name to "Honest Insys" and in a press release done by the new CEO, should explain all the new core values, mission statement, employees, and any major changes to the company, such as its new name. Lastly, marketing needs to be highly used right now with this new emerging company so that customers know that they can be trusted and their products are worth using. Commercial and billboards along with the press release are just a few ways to market. Overall, a lot needs to be done in order to get this new and improved Insys Therapeutics back on its feet. It will not be cheap, but it will be worth it.

-Emily Sarkisian

Works Cited

Insys Therapeutics, Insys Therapeutics,

Pacenti, John. Veteran, would-be lawyer, mom left dead or addicted after Subsys, The   Palm Beach Post, 11 Apr. 2018, dead- or-addicted-after-subsys.

Salazar, Heather. The Business Ethics Case Manual. n.d.

Turner, Ashley. Insys Therapeutics founder, former executives found guilty in criminal     fentanyl   bribery case, CNBC, 2 May 2019,     therapeutics-former-executives-found-guilty-in-criminal-opioid-case.html.

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