The Fentanyl Hustle: Inside the First Drug Company Convicted Under RICO
Published 2026-10-20
How Insys Therapeutics used a sham speakers bureau, an undercover call center, and a weaponized fentanyl spray to execute the first pharmaceutical racketeering conspiracy in U.S. history.
In 2015, an internal sales conference for an Arizona pharmaceutical company featured a produced music video that prosecutors would later replay in open federal court. A sales representative danced in a plush costume shaped like a giant can of Subsys—a sublingual fentanyl spray fifty times more potent than morphine—while another employee rapped: *“I got the new thing, it’s going to shock the nation / I got new patients and I got a lot of them.”*
At the end of the video, former vice president of sales Alec Burlakoff unzipped the oversized costume to reveal a grin. In the world of Insys Therapeutics, this was not satire; it was corporate strategy.
Founded in 2002 by billionaire John Kapoor, Insys operated under a simple premise: Subsys had been approved by the Food and Drug Administration (FDA) strictly for breakthrough cancer pain in opioid-tolerant patients. But that market was tiny, and Kapoor demanded explosive, triple-digit growth. To get it, Insys turned an industrial-strength synthetic narcotic into a weaponized revenue stream, deploying a nationwide bribery and racketeering scheme that flooded non-cancer patients with lethal doses of fentanyl.
## The Pay-to-Play Playbook
Subsys entered the market in March 2012. It was an exceptionally fast-acting formulation delivered via a spray under the tongue, intended solely to rescue terminal cancer patients from sudden, blinding spikes of agony. Under FDA guidelines, prescribing it off-label to opioid-naive patients carried severe risks of fatal respiratory depression.
Kapoor, an exacting micromanager who retained a controlling equity stake, set daily prescriptions quotas. To reach them, Insys systematically bypassed medical ethics through an elaborate facade known as the "Speakers Bureau."
On paper, the Speakers Bureau paid certified medical professionals honoraria to educate peers on cancer pain management. In reality, it was a quid pro quo kickback laundering operation. Insys sales representatives selected prescribers not based on clinical reputation, but on raw prescription volume. If a physician stopped writing Subsys prescriptions, the speaker dinners vanished.
> “They were blatant about it,” trial testimony revealed. At one dinner in New York, a sales rep ordered $2,000 worth of food and drinks while the invited doctor and staff simply signed attendance sheets and left within fifteen minutes.
To maximize the payments, Insys hired young, inexperienced sales representatives whose primary qualification was aggressiveness. In one documented instance, a former exotic dancer was hired as a regional sales manager and took a high-prescribing pain doctor to a Chicago strip club, where she gave him a lap dance to secure more high-dose Subsys orders.
Kapoor tracked every dollar. Internal spreadsheets dubbed "Return on Investment" (ROI) directly cross-referenced speaker fees paid to physicians against the revenue generated by their subsequent prescriptions. If a doctor produced a 2-to-1 or 3-to-1 ROI, regional managers were pressured to push harder; top targets routinely delivered 10-to-1 returns, generating hundreds of thousands of dollars in profit off single prescribers.
## The "Prior Authorization" Deception Machine
The strategy had one structural vulnerability: health insurers. A single monthly prescription of Subsys could cost upwards of $20,000 to $30,000. Before paying, insurers required "prior authorization"—demanding proof that the patient had active cancer and had failed other opioid therapies.
Rather than letting legitimate insurance checks restrict sales, Insys constructed a boiler-room call center inside its Chandler, Arizona headquarters. Known internally as the "Insurance Reimbursement Center" (IRC), the unit operated under direct instructions to deceive insurance adjusters.
IRC employees were instructed to spoof caller ID systems so their calls appeared to originate from the treating physicians' offices. When adjusters asked directly if they were calling from the doctor's practice, employees were trained to reply: *“I’m with Dr. [Name]’s office.”*
When questioned about whether a patient suffered from breakthrough cancer pain, call center operators recited scripted evasions. They claimed the patient had "breakthrough pain" caused by a underlying "malignancy" or read out vague diagnostic codes. In numerous recorded calls intercepted by federal investigators, IRC workers openly lied about patients' cancer diagnoses, falsely informing adjusters that patients with neck pain, sports injuries, or chronic backaches were fighting terminal oncology battles.
The ploy worked. Insurers rubber-stamped millions of dollars in claims. Insys went public in 2013, quickly becoming one of Wall Street's best-performing pharmaceutical IPOs. Kapoor's net worth soared past $2 billion.
## The Human Toll
Behind the stock price sat thousands of patients trapped in devastating addictions or dead from accidental overdoses. Because Insys paid the highest commissions on the highest dosage strengths, sales representatives actively pushed doctors to titrate patients up to 1,200 and 1,600 microgram canisters—doses potent enough to kill non-tolerant individuals.
Sarah Fuller, a 32-year-old fibromyalgia and neck pain patient from New Jersey, had never had cancer. Her doctor, who took thousands of dollars in Insys speaking fees, prescribed her Subsys. IRC employees falsely certified her as a cancer patient. In March 2016, she died in her bedroom from an acute fentanyl overdose.
In Connecticut, a nurse practitioner named Heather Alfonso was paid $83,000 by Insys to give talks—often to crowds composed entirely of her own family members and colleagues. In exchange, she became the state's top prescriber of Subsys, generating over $2.5 million in sales and driving dozens of vulnerable patients into severe, chemically induced dependencies.
The Centers for Disease Control and Prevention (CDC) estimated that during the mid-2010s, synthetic opioids drove the single sharpest spike in U.S. drug overdose mortality in history. While illicit street fentanyl dominated the headlines, Insys proved that corporate suites were deploying the exact same lethal product with institutional precision.
## The Reckoning
The scheme began unraveling when local whistleblowers and investigative journalists at the *Southern Investigative Reporting Foundation* (now *The Capitol Forum*) exposed the fabricated speaker programs and call center scripts. Federal prosecutors in Boston, led by the U.S. Attorney’s Office for the District of Massachusetts, launched a comprehensive investigation.
In December 2016, federal agents arrested former CEO Michael Babich. Kapoor was arrested in October 2017 and indicted under the Racketeer Influenced and Corrupt Organizations (RICO) Act—a federal statute traditionally reserved for mafia bosses, drug cartels, and organized crime syndicates. It was the first time in American history that the top executive of a publicly traded pharmaceutical company faced federal racketeering charges for marketing a drug.
The 2019 criminal trial in Boston laid bare the internal culture of Insys. Jurors listened to intercepted phone calls, viewed internal spreadsheets calculating kickback ROIs, and watched the notorious fentanyl rap video. Witnesses described Kapoor as ruthless, calculating, and indifferent to patient well-being.
In May 2019, a federal jury found Kapoor and four top executives—including Burlakoff, former vice president Michael Gurry, and national sales director Richard Simon—guilty of racketeering conspiracy.
In January 2020, Kapoor was sentenced to 66 months in federal prison and ordered to pay tens of millions in restitution and asset forfeitures. Insys filed for Chapter 11 bankruptcy days after reaching a $225 million global settlement with the Department of Justice, liquidating its assets and delisting from the Nasdaq.
## The Structural Lesson
The Insys scandal was not an example of rogue employees pushing boundaries; it was a company that institutionalized fraud as its principal business model. Every node of the corporate hierarchy, from board meetings to customer service scripts, was calibrated to circumvent laws designed to keep lethal chemicals out of the public bloodstream.
While Kapoor’s prison sentence established a vital legal precedent—demonstrating that pharmaceutical executives can be prosecuted as racketeers—the conditions that enabled Insys remain dangerously intact. The American healthcare system's fee-for-service architecture, opaque manufacturer-insurer authorization pipelines, and widespread reliance on private "advisory" compensation allow bad actors to monetize prescribing power.
Until regulatory agencies aggressively eliminate financial kickbacks disguised as medical education and impose strict personal liability on executive leadership across the sector, the risk remains: corporate boards will weigh the astronomical profits of aggressive drug pushing against the remote possibility of prison—and decide the gamble is worth the cost.
At the end of the video, former vice president of sales Alec Burlakoff unzipped the oversized costume to reveal a grin. In the world of Insys Therapeutics, this was not satire; it was corporate strategy.
Founded in 2002 by billionaire John Kapoor, Insys operated under a simple premise: Subsys had been approved by the Food and Drug Administration (FDA) strictly for breakthrough cancer pain in opioid-tolerant patients. But that market was tiny, and Kapoor demanded explosive, triple-digit growth. To get it, Insys turned an industrial-strength synthetic narcotic into a weaponized revenue stream, deploying a nationwide bribery and racketeering scheme that flooded non-cancer patients with lethal doses of fentanyl.
## The Pay-to-Play Playbook
Subsys entered the market in March 2012. It was an exceptionally fast-acting formulation delivered via a spray under the tongue, intended solely to rescue terminal cancer patients from sudden, blinding spikes of agony. Under FDA guidelines, prescribing it off-label to opioid-naive patients carried severe risks of fatal respiratory depression.
Kapoor, an exacting micromanager who retained a controlling equity stake, set daily prescriptions quotas. To reach them, Insys systematically bypassed medical ethics through an elaborate facade known as the "Speakers Bureau."
On paper, the Speakers Bureau paid certified medical professionals honoraria to educate peers on cancer pain management. In reality, it was a quid pro quo kickback laundering operation. Insys sales representatives selected prescribers not based on clinical reputation, but on raw prescription volume. If a physician stopped writing Subsys prescriptions, the speaker dinners vanished.
> “They were blatant about it,” trial testimony revealed. At one dinner in New York, a sales rep ordered $2,000 worth of food and drinks while the invited doctor and staff simply signed attendance sheets and left within fifteen minutes.
To maximize the payments, Insys hired young, inexperienced sales representatives whose primary qualification was aggressiveness. In one documented instance, a former exotic dancer was hired as a regional sales manager and took a high-prescribing pain doctor to a Chicago strip club, where she gave him a lap dance to secure more high-dose Subsys orders.
Kapoor tracked every dollar. Internal spreadsheets dubbed "Return on Investment" (ROI) directly cross-referenced speaker fees paid to physicians against the revenue generated by their subsequent prescriptions. If a doctor produced a 2-to-1 or 3-to-1 ROI, regional managers were pressured to push harder; top targets routinely delivered 10-to-1 returns, generating hundreds of thousands of dollars in profit off single prescribers.
## The "Prior Authorization" Deception Machine
The strategy had one structural vulnerability: health insurers. A single monthly prescription of Subsys could cost upwards of $20,000 to $30,000. Before paying, insurers required "prior authorization"—demanding proof that the patient had active cancer and had failed other opioid therapies.
Rather than letting legitimate insurance checks restrict sales, Insys constructed a boiler-room call center inside its Chandler, Arizona headquarters. Known internally as the "Insurance Reimbursement Center" (IRC), the unit operated under direct instructions to deceive insurance adjusters.
IRC employees were instructed to spoof caller ID systems so their calls appeared to originate from the treating physicians' offices. When adjusters asked directly if they were calling from the doctor's practice, employees were trained to reply: *“I’m with Dr. [Name]’s office.”*
When questioned about whether a patient suffered from breakthrough cancer pain, call center operators recited scripted evasions. They claimed the patient had "breakthrough pain" caused by a underlying "malignancy" or read out vague diagnostic codes. In numerous recorded calls intercepted by federal investigators, IRC workers openly lied about patients' cancer diagnoses, falsely informing adjusters that patients with neck pain, sports injuries, or chronic backaches were fighting terminal oncology battles.
The ploy worked. Insurers rubber-stamped millions of dollars in claims. Insys went public in 2013, quickly becoming one of Wall Street's best-performing pharmaceutical IPOs. Kapoor's net worth soared past $2 billion.
## The Human Toll
Behind the stock price sat thousands of patients trapped in devastating addictions or dead from accidental overdoses. Because Insys paid the highest commissions on the highest dosage strengths, sales representatives actively pushed doctors to titrate patients up to 1,200 and 1,600 microgram canisters—doses potent enough to kill non-tolerant individuals.
Sarah Fuller, a 32-year-old fibromyalgia and neck pain patient from New Jersey, had never had cancer. Her doctor, who took thousands of dollars in Insys speaking fees, prescribed her Subsys. IRC employees falsely certified her as a cancer patient. In March 2016, she died in her bedroom from an acute fentanyl overdose.
In Connecticut, a nurse practitioner named Heather Alfonso was paid $83,000 by Insys to give talks—often to crowds composed entirely of her own family members and colleagues. In exchange, she became the state's top prescriber of Subsys, generating over $2.5 million in sales and driving dozens of vulnerable patients into severe, chemically induced dependencies.
The Centers for Disease Control and Prevention (CDC) estimated that during the mid-2010s, synthetic opioids drove the single sharpest spike in U.S. drug overdose mortality in history. While illicit street fentanyl dominated the headlines, Insys proved that corporate suites were deploying the exact same lethal product with institutional precision.
## The Reckoning
The scheme began unraveling when local whistleblowers and investigative journalists at the *Southern Investigative Reporting Foundation* (now *The Capitol Forum*) exposed the fabricated speaker programs and call center scripts. Federal prosecutors in Boston, led by the U.S. Attorney’s Office for the District of Massachusetts, launched a comprehensive investigation.
In December 2016, federal agents arrested former CEO Michael Babich. Kapoor was arrested in October 2017 and indicted under the Racketeer Influenced and Corrupt Organizations (RICO) Act—a federal statute traditionally reserved for mafia bosses, drug cartels, and organized crime syndicates. It was the first time in American history that the top executive of a publicly traded pharmaceutical company faced federal racketeering charges for marketing a drug.
The 2019 criminal trial in Boston laid bare the internal culture of Insys. Jurors listened to intercepted phone calls, viewed internal spreadsheets calculating kickback ROIs, and watched the notorious fentanyl rap video. Witnesses described Kapoor as ruthless, calculating, and indifferent to patient well-being.
In May 2019, a federal jury found Kapoor and four top executives—including Burlakoff, former vice president Michael Gurry, and national sales director Richard Simon—guilty of racketeering conspiracy.
In January 2020, Kapoor was sentenced to 66 months in federal prison and ordered to pay tens of millions in restitution and asset forfeitures. Insys filed for Chapter 11 bankruptcy days after reaching a $225 million global settlement with the Department of Justice, liquidating its assets and delisting from the Nasdaq.
## The Structural Lesson
The Insys scandal was not an example of rogue employees pushing boundaries; it was a company that institutionalized fraud as its principal business model. Every node of the corporate hierarchy, from board meetings to customer service scripts, was calibrated to circumvent laws designed to keep lethal chemicals out of the public bloodstream.
While Kapoor’s prison sentence established a vital legal precedent—demonstrating that pharmaceutical executives can be prosecuted as racketeers—the conditions that enabled Insys remain dangerously intact. The American healthcare system's fee-for-service architecture, opaque manufacturer-insurer authorization pipelines, and widespread reliance on private "advisory" compensation allow bad actors to monetize prescribing power.
Until regulatory agencies aggressively eliminate financial kickbacks disguised as medical education and impose strict personal liability on executive leadership across the sector, the risk remains: corporate boards will weigh the astronomical profits of aggressive drug pushing against the remote possibility of prison—and decide the gamble is worth the cost.