The Pharma Startup That Went from Treating Cancer Patients to Drug Trafficking Conspiracy ‹ Storyva – True Crime Story

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John Kapoor had already amassed a small fortune in pharmaceuticals when he founded Insys Therapeutics. It was the early 2000s, a boom time for painkillers, and he developed a novel formulation of fentanyl, the most potent opioid on the market. In the following excerpt from The Hard Sell: crime and Punishment at an Opioid Startup, Evan Hughes tells the story of the founding of Insys and its first development of the drug that would later put the company at the center of a federal drug trafficking conspiracy investigation.

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For any pharmaceutical startup, a central challenge is how to sustain the company financially for the years required to push drugs through the pipeline to regulatory approval. Until a prized letter from the FDA arrives, a drug doesn’t bring in the first dollar. With Insys, the initial plan was to win the race to market the first generic version of Marinol, a branded treatment for nausea and vomiting induced by chemotherapy, and for wasting caused by AIDS. The active ingredient is dronabinol, or synthetic THC (the compound found in marijuana that stimulates the appetite). Kapoor thought that his dronabinol medication would take perhaps two or three years and $5 million to develop—small numbers in the business. At that point, according to the plan, the drug would start bringing in substantial revenue, which could be used to fund the lengthy and more expensive development of other products that he and Kottayil were exploring.

One of those products was a fentanyl spray.

In the origin story that Kapoor has often told, it was the travails of his wife that drove him to develop Subsys. Kapoor had met Editha Hillock back when he was living in the Buffalo area, shortly after earning his PhD. Eight years younger than Kapoor, she had been raised and educated in Grand Island, New York, and had been a cheerleader at Niagara County Community College. They married in 1974, holding two traditional ceremonies, one Hindu and one Catholic. Editha took his last name. Kapoor was deeply devoted to her. The initials in EJ Financial stand for Editha and John.

Editha Kapoor battled breast cancer in the 1990s, prior to the founding of Insys, and then suffered a recurrence in 2004, when she was in her early fifties. Her health declined, and Kapoor spent a lot of time at her bedside. He consulted doctors nationwide. He tried everything. “I’ve never seen a husband fight the way he fought to save her life,” a relative of Editha’s said. Kapoor’s wife lost a lot of weight. She suffered terribly.

“I can tell you,” Kapoor later told Forbes, “pain is such a misunderstood thing for cancer patients. Nobody understands pain. They think pain is just pain. My wife went through it.” In her final days, family gathered in the Kapoor house could hear her wailing from the other room.

Editha Kapoor died at home in 2005, at fifty-four years old. Kapoor called out his nickname for Editha as he wept, saying the word “Bunny” over and over, like an incantation.

For many months, Kapoor withdrew almost completely from social and professional life. Nothing could hold his interest. Family wondered if he would ever recover.

His absence and sudden indifference to work created difficulties at EJ Financial; Kapoor was a central figure in a number of companies, private and public. In this period, Mike Babich often stepped up in Kapoor’s stead. Increasingly, he was at his boss’s right hand.

After his wife’s death, Kapoor invested more and more into pushing Subsys forward. The aim of the product, Kapoor said, was to help people like his wife—seriously ill people battling severe pain.

Unlike the generics that had largely been Kapoor’s stock-in-trade, Subsys was to be a branded drug. When applying for FDA approval, a drugmaker must specify a so-called indication, meaning a diagnosis the medication is meant to treat. For Subsys, the indication would be breakthrough cancer pain—sudden flares of pain that exceed the threshold of a long-acting painkiller the cancer patient would be taking simultaneously.

Subsys had the potential to ease the suffering of people in devastating pain, improving their lives immeasurably. It was also a great business idea.

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Developing a brand-name drug that is truly novel can bring a pharmaceutical company a huge windfall, but it’s an inherently risky endeavor. After years of sunk costs, failure is far more common than success. Drugs that look promising in the early stages of testing frequently fail in late-stage clinical trials, dealing a massive financial blow to the companies behind them. Creating a generic product is a much safer play, but it comes with smaller rewards.

Subsys had the potential to occupy a sweet spot somewhere in between: a large payoff without the enormous commercial risk. It would cost tens of millions to bring to market, but many branded products cost far more than that to develop and need to traverse more pitfalls,  because  they’re based on a new chemical  entity; in  simple terms, they’re made from scratch. Subsys, by contrast, was a “reformulation” of a drug that already existed, a molecule with known effects on the body.

Fentanyl, the active ingredient in Subsys, dates back to 1960. In the decades after it was first synthesized, it came into widespread use in hospitals, as an intravenous anesthetic during surgery and in epidural injections for women in labor. By the time Subsys entered the picture, despite rising concerns about addiction and abuse, a few take-home fentanyl prescription drugs were also available or in the pipeline. The most widely used was a slow-release patch worn on the skin, branded as Duragesic, but other products on the landscape were even more similar to Subsys.

Kapoor’s intention with Subsys was not to forge a new market but to enter this small class of existing medications in the hopes of convincing doctors that his was the best in class. These products— Subsys’s future competitors—are sometimes called rapid-onset opioids. The more technical term is TIRF medications (pronounced “turf”), for transmucosal immediate-release fentanyl. Rather than being swallowed in pill form, the fentanyl in these products passes through the highly permeable mucous membrane lining the mouth or nose, providing fast and efficient absorption of the drug into the bloodstream. “Rapid onset” is meant to indicate that they are quicker than long-acting and short-acting opioids. Only intravenous injection is faster.

All the TIRFs on the market were FDA approved solely for breakthrough cancer pain. The first TIRF for out-of-hospital use, called Actiq, was approved in 1998. Actiq was acquired two years later by a drugmaker called Cephalon. In 2003, Cephalon bought out a potential future competitor too; it announced that it would acquire through a merger another TIRF that was in the pipeline. That prod- uct came to be called Fentora, and Cephalon launched it in 2006, just after Actiq lost U.S. patent protection (ensuring that the company kept a branded drug on the market, rather than ceding territory to generics). By that time, several other competitors, including Subsys, were on the way.

The only distinction among the TIRF products was how exactly the fentanyl was delivered into the body. Actiq is a lozenge on a stick—a lollipop, essentially—to be rubbed against the inside of the cheek. Fentora is an effervescent tablet that dissolves between the gum and the cheek.

Subsys was conceived as a spray that a patient would shoot under the tongue. This distinction in delivery method would be enough to make it a branded drug, not a generic. Assuming it cleared the bar of FDA approval, Kapoor could secure the brass ring of the pharma business: a period of patent protection and market exclusivity. No one else could sell a fentanyl spray for years. If Kapoor could show that delivering fentanyl in a spray was superior to the other formulations, he could potentially dominate a market that his competitors had already built, by applying a twist to their idea.

What’s more, this was a lucrative market. On the one hand, TIRFs were not widely used, in relative terms. In total prescriptions, they were dwarfed by household-name opioids such as OxyContin and Vicodin, which were indicated for a broader set of patients. However, TIRFs still produced tremendous revenue because they commanded a high price. A one-month prescription typically cost thousands of dollars, an order of magnitude more than the price of OxyContin, not to mention generic opioid pills available for less than $20. And TIRF prices were rising rapidly. In 2006, Actiq generated over half a billion dollars in sales for Cephalon, a number not far from the OxyContin stratosphere. That was the year that Insys first filed a patent application for a sublingual fentanyl spray.

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Babich’s version of the Subsys origin story has a less altruistic cast to it than Kapoor’s. In Babich’s narrative, the clear business potential of the product figures more heavily than Editha Kapoor’s health history. Everything stemmed from Kapoor’s observation that spray delivery was not only scientifically promising but remunerative. When Kapoor was a director of First Horizon, that company had marketed a successful oral spray to treat angina attacks. According to Babich, Kapoor observed that sublingual sprays could be priced much higher than pills and compete with generics. He couldn’t see why more sprays weren’t being developed. As Kapoor has said himself, he was very familiar with Cephalon’s Actiq and thought fentanyl might work in a spray and compete with it. He tasked his scientists with simultaneously exploring spray delivery formulations of fentanyl and other molecules, intended to treat different conditions. Fentanyl won out.

Part of what made TIRF products so financially promising was that despite the FDA’s intentions the drugs were not, in actuality, restricted solely to patients with breakthrough cancer pain—not even close. More often than not, in fact, they were prescribed “off label”— for uses other than the FDA-approved indication. Pain management doctors, rather than oncologists, were the major players, and they were using TIRFs to treat all kinds of pain. A Cephalon internal study of 2004 data showed that Actiq was used most commonly to treat back pain. Only around one out of five patients taking Fentora actually suffered from breakthrough cancer pain, a 2008 FDA analysis found.

These doctors weren’t doing anything illegal. Health-care providers are permitted to prescribe off label, and they commonly do. Medications developed to treat seizures are used by psychiatrists to treat bipolar disorder. Drugs indicated for psychiatric disorders are prescribed for insomnia, for premature ejaculation, and to help patients quit smoking.

But regulators draw an important distinction between what is permitted for doctors and what is permitted for drug companies. While clinicians can prescribe off label, using their own judgment, it is generally forbidden for a pharmaceutical company to promote a product for off-label uses. The rationale is that in determining what is safe and appropriate for a patient, a highly trained doctor should be given leeway to depart from FDA guidance, but a drugmaker should be given no leeway at all, in view of its obvious bias. (Recent legal challenges have carved out exceptions and eroded enforcement, but the prohibition against off-label marketing remains in place.)

Even as drug manufacturers are barred from encouraging it, off-label prescribing nevertheless represents a major boon to the industry. The fact that a doctor can prescribe a drug for any reason naturally grows the potential market for it. With TIRF drugs in particular, off-label uses constituted the lion’s share of the business.

Was Kapoor in fact developing a drug for cancer patients, then?

Yes and no.

On the years-long path to FDA approval that lay ahead, Insys would sponsor a lengthy series of clinical trials for Subsys. In the critical late-stage trials, the fentanyl spray would be tested only on cancer patients, because the sole indication Insys was applying for was breakthrough cancer pain. In the end, fully a quarter of the patients died during the period of the final trial—a jarring figure, but not a major setback for Subsys. The trial subjects were extremely ill to begin with. That was the kind of patient Subsys was ostensibly meant to reach: a person in dire health, a person for whom dependence and addiction are not the foremost concerns. Describing the use of TIRF products, Dr. Lewis Nelson, then of the New York University School of Medicine, told The New York Times, “If you’re waiting to die, you should die in comfort and dignity. It’s very different than if you’re attempting to have a functional life, because these drugs are relatively incompatible with having a functional life.”

With Subsys, as with any drug candidate, the FDA’s job would be to study the trial results and conduct a careful risk-benefit analysis tailored to the indication. The agency was tasked with determining if the drug was safe and effective. But the FDA doesn’t use the word “safe” in quite the way the rest of us do, as its officials sometimes try to publicly explain. The agency determines whether a product is safe enough relative to the benefits, under a particular set of circumstances—if the risks, in other words, are worth it.

What is appropriate in medicine depends greatly, of course, on a patient’s condition. Prying open a person’s chest to grab and palpate the heart by hand may be the best course of action in a cardiac emergency; it is obviously not a wise thing to do in other cases. Likewise, a highly addictive opioid may be the right choice for a terminally ill person in terrible suffering but totally inappropriate as a treatment for, say, moderate lower back pain.

With FDA approval, however, Insys would have a “crowbar” to pry open a wider market, as a former Insys sales trainer put it. The track record of other TIRFs had already shown that doctors would prescribe Subsys to people who were nothing like the patients in the clinical trial, and the FDA would be unable to stop them. For Insys, that was a business opportunity too big to ignore. If the company marketed its drug only to cancer specialists, it could never compete with Cephalon.

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Excerpted from The Hard Sell: crime and Punishment at a an Opioid Startup, by Evan Hughes. Published by Doubleday Books. Copyright, 2022, Evan Hughes. All rights reserved. Reprinted with permission.

The Pharma Startup That Went from Treating Cancer Patients to Drug Trafficking Conspiracy ‹ Storyva – True Crime Story

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