John Kapoor also owns a stake in drug maker Akron, his net worth is estimated to be USD 1.75 billion
A 74-year-old Indian-American pharmaceutical billionaire was today charged with leading a nationwide conspiracy in the US by bribing doctors to over-prescribe a powerful opioid to patients and committing fraud on insurance firms for profit.
John Nath Kapoor was arrested by the FBI from his home in Arizona yesterday on charges including racketeering, conspiracy and fraud.
The Amritsar-born entrepreneur and well-known philanthropist, who migrated to the US from India in 1960s, is a current member of the board of directors of the pharmaceutical company Insys Therapeutics.
A superseding indictment, unsealed in Boston, also includes additional allegations against several former company executives and managers who were initially indicted in December 2016.
"More than 20,000 Americans died of synthetic opioid overdoses last year, and millions are addicted to opioids. And yet some medical professionals would rather take advantage of the addicts than try to help them," said Attorney General Jeff Sessions.
"This Justice Department will not tolerate this. We will hold accountable anyone - from street dealers to corporate executives, who illegally contributes to this nationwide epidemic," Sessions said.
The indictment also alleges that Mr Kapoor and six former executives conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients.
They achieved this goal by setting up the "reimbursement unit", which was dedicated to obtaining prior authorisation directly from insurers and pharmacy benefit managers, it said.
"In the midst of a nationwide opioid epidemic that has reached crisis proportions, Mr Kapoor and his company stand accused of bribing doctors to over-prescribe a potent opioid and committing fraud on insurance companies solely for profit," said Acting US Attorney William D Weinreb.
"Today's arrest and charges reflect our ongoing efforts to attack the opioid crisis from all angles. We must hold the industry and its leadership accountable - just as we would the cartels or a street-level drug dealer," he said.
Following the arrest, the company shares fell 23 per cent to USD 5.74, a three-year inter day low.
According to Insys website, Mr Kapoor received his PhD in Medicinal Chemistry from the State University of New York at Buffalo and a BS in Pharmacy from Bombay University in India.
The building that is home to University of Buffallo's School of Pharmacy and Pharmaceutical Sciences bears the name of Mr Kapoor and his wife in recognition of their long-time philanthropic support for the school and the university.
"The university is aware of Dr Kapoor's arrest. We became aware of the charges through today's media reports and therefore it would be premature to comment further or take any action until the university has more information," the university said in a statement.
Mr Kapoor has served on Insys board of directors since its formation in 1990 and has served as Chairman from 1990 to 2004 and Executive Chairman from June 2006 to January 2017.
He also owns a large stake in generic drug maker Akron. According to Forbes, his net worth is estimated to be USD 1.75 billion.
He had stepped down as CEO and chairman of the company in January 2017, a month after six of its former executives including Mr Kapoor's predecessor as CEO Michael Babich were arrested and charged with conspiracies to bribe doctors to needlessly subscribe Subsys, which is a Fentanyl spray to treat patients with severe cancer pain, Forbes said.