The Hard Sell

Description

The inside story of a band of entrepreneurial upstarts who made millions selling painkillers—until their scheme unraveled, putting them at the center of a landmark criminal trial. • THE BASIS FOR THE MAJOR MOTION PICTURE PAIN HUSTLERS STARRING EMILY BLUNT AND CHRIS EVANS 

“Unfolds with the velocity and verve of a Scorsese film…A tour de force.”—Patrick Radden Keefe, New York Times bestselling author of Empire of Pain and Say Nothing

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.
 
Kapoor, a brilliant immigrant scientist with relentless business instincts, was eager to make the most of his innovation. He gathered around him an ambitious group of young lieutenants. His head of sales—an unstable and unmanageable leader, but a genius of persuasion—built a team willing to pull every lever to close a sale, going so far as to recruit an exotic dancer ready to scrape her way up. They zeroed in on the eccentric and suspect doctors receptive to their methods. Employees at headquarters did their part by deceiving insurance companies. The drug was a niche product, approved only for cancer patients in dire condition, but the company’s leadership pushed it more widely, and together they turned Insys into a Wall Street sensation.
 
But several insiders reached their breaking point and blew the whistle. They sparked a sprawling investigation that would lead to a dramatic courtroom battle, breaking new ground in the government’s fight to hold the drug industry accountable in the spread of addictive opioids.
 
In The Hard Sell, National Magazine Award–finalist Evan Hughes lays bare the pharma playbook. He draws on unprecedented access to insiders of the Insys saga, from top executives to foot soldiers, from the patients and staff of far-flung clinics to the Boston investigators who treated the case as a drug-trafficking conspiracy, flipping cooperators and closing in on the key players.
 
With colorful characters and true suspense, The Hard Sell offers a bracing look not just at Insys, but at how opioids are sold at the point they first enter the national bloodstream—in the doctor’s office.“A fast-paced and maddening account…. Until I read [Pain Hustlers], about the outrageous behavior of an obscure drug company, I hadn’t appreciated the full extent of the filth or the dark stain the opioid sector has left on the entire industry…. What’s most surprising and powerful about [Pain Hustlers] is not one company’s criminality—we’ve grown inured to corporations behaving badly—as much as how institutionalized these practices were across the modern drug industry.” 
—New York Times Book Review

“A feat of rigorous sleuthing and deft storytelling that unfolds with the velocity and verve of a Scorsese film. Everything about the Insys saga feels amplified to its utmost extreme—greed, ambition, criminality, hustle, intrigue, betrayals—and this is that rare story of the opioid crisis in which the bad guys face a genuine reckoning. I couldn’t turn the pages fast enough. A tour de force.”
—Patrick Radden Keefe, New York Times bestselling author of Empire of Pain and Say Nothing

“A richly reported, mesmerizing tale, and a devastating indictment of our broken pharmaceutical industry. Everyone should read this book.”
—Sheelah Kolhatkar, staff writer at The New Yorker and New York Times bestselling author of Black Edge

“Filled with odd and scintillating details, [Pain Hustlers] plots the winding way one drug company and its associated doctors helped to beget the latest wave in our ongoing opioid crisis.”
—Errol Morris, Academy Award–winning filmmaker

“When you’re running a pharma startup, how does the obvious wrong thing to do become the thing you do anyway? [Pain Hustlers], fascinating in the fashion of a slow-moving train wreck, is a study of corruption in which we see how the actions of key executives make a kind of awful sense given the ecosystem in which they operate.”
—Ted Conover, National Book Critics Circle Award–winning author of Newjack and The Routes of Man

“Vivid…A tightly focused and insightful account…As a gripping tale of one drug firm’s unscrupulous efforts to profit from pain, [Pain Hustlers] is hard to beat.”
—The Boston Globe

“Excellent…Hughes has somehow produced what feels like a seamless, fly-on-the-wall account that can be devoured in one sitting.”
—The Globe and Mail

“A revelatory deep dive into the ignominious history of the pharmaceutical manufacturer Insys Therapeutics…Hughes does an excellent job of illuminating the inner workings of Big Pharma’s malicious practices…A powerful indictment of abhorrent industry practices.”
—Publishers Weekly (starred review)

“As compelling as a true crime documentary…Hughes perfectly captures the human impact of pharmaceutical sales and corporate greed…Anyone who picks up this title will be left reflecting on how the U.S. medical system and drug companies have recklessly destroyed countless lives. A book readers will not soon forget.”
—Library Journal (starred review)

“A journalist pulls back the curtain on the scandals that sent the first pharmaceutical executives to prison for their role in the opioid crisis…A brisk and engaging account.”
—Kirkus Reviews

“Unfolds like a blockbuster film. Fans of Bad Blood by John Carreyrou will be captivated by this story of unbelievable greed and hubris. A must-read.”
—Booklist (starred review)EVAN HUGHES was a finalist for the National Magazine Award in Reporting in 2015. He has written for The New York Times Magazine, GQ, New York, Wired, and The New York Review of Books. He is the author of Literary Brooklyn.

 

PROLOGUE

 

Gavin Awerbuch had a long commute, but often he arrived at work before dawn. After an hour and a half ’s drive, his headlights would swing into the parking lot, illuminating a one-story beige brick building that resembled a shopping plaza, divided into storefronts.

It was Saginaw, Michigan. In the winters it was frigid. Awerbuch would get out of his Chevrolet HHR, and when he was the first one there, he would unlock the door. He worked in the unit farthest to the right, where his name was stenciled in white letters on the glass door.

Awerbuch was too busy to pay much attention to his appearance. His graying hair sprouted in every direction, and he was often unshaven. At the office, he wore casual clothes—a sweatshirt and jeans, perhaps. He was disheveled enough that people wondered if he had slept in his outfit. His lab coat looked as if it could use a wash. He would shrug it on over his street clothes after he arrived at the office. Then the people would come, in a constant flow.

Awerbuch was a doctor. He was educated at Michigan State, the University of Arizona, and Wayne State University in Detroit. In 1989, he completed the specialized training to become a neurologist, treating conditions of the nervous system. In the early years, his prac- tice evolved from focusing on disorders such as stroke and multiple sclerosis into managing pain in a broader set of patients. People came to him suffering from migraines, neck pain, back pain.

By 2012, Awerbuch’s clinic was a major medical destination in the area, about ninety miles northwest of Detroit, not far from Flint. Awerbuch had around five thousand active patients, pouring into the small office suite at a rate of perhaps fifty a day. Some of them drove for hours to see him, from as far away as Michigan’s Upper Penin- sula. The wait was long once they got there.

Awerbuch had opened his clinic in the area in order to cater to an underserved population. The city core of Saginaw is predominantly black, but Awerbuch’s clinic was located on the outskirts, where the city gives way quickly to farmland with a majority-white, blue-collar population. In the wake of the global financial collapse, jobs were in short supply. With the near collapse of the Big Three carmakers, a top local employer, an auto-parts manufacturer, had become a shell of its former self, shedding workers and entering bankruptcy before being purchased by Chinese interests.

A lot of Awerbuch’s patients wore work jackets or camouflage. Many were retired or on disability. More than half were on Medicaid or Medicare. Walkers, braces, and wheelchairs were a common sight at the clinic.

To patients, Dr. Awerbuch appeared to be a man of great decency, ministering one at a time to their deeply personal needs, with the unpretentious air of a social worker. He was a small man and never intimidating or confrontational. He wasn’t one of those doctors who let you know that he had power over you. He cared for his patients, many of them said. He took their pain seriously.

By this time the medical community was grappling with the fact that the prolonged boom in opioid prescribing that had begun in the late 1990s had helped to create a nationwide health crisis. Now, heightened scrutiny and changing medical opinion were altering the landscape of pain management. Many physicians were beginning to turn away from prescribing opioids over the long term or at high doses. Instead, doctors were referring patients struggling with chronic pain to specialists such as Awerbuch. This was not simply a matter of deferring to the experts; it was also a way of dumping a difficult problem on someone else. Treating pain is demanding and sensitive, and liability comes with the territory. Awerbuch became, for many patients, a port of last resort, a man who would give them the potent medications they depended on when other doctors would not.

 

IN JANUARY 2013, a regular patient made the trip to the clinic in Saginaw. He told Dr. Awerbuch that his back pain was manageable, ranging from a 3 to a 4 on a scale of 1 to 10. He had been riding motorcycles lately, he added, making conversation. The patient said the Vicodin that Awerbuch had put him on seemed okay, but he asked for a prescription of the painkiller OxyContin. Awerbuch told him that he ought to try a new medication instead, and showed it to him.

The doctor held in his hand a small plastic bottle with a spout that extended from the top like a periscope. The medication was a liquid spray, and Awerbuch explained that you shoot it under your tongue. The drug had only just been approved the previous year. It was called Subsys. It is an opioid many times more powerful than OxyContin.

What Awerbuch didn’t know was that the patient at this appointment was an undercover agent. The whole encounter was covertly recorded on video. At least three agents had been seeing Awerbuch for many months, posing as patients and concocting fake medical complaints.

At the outset of their investigation, the authorities were looking into the  doctor’s  prolific  billing  for  certain  diagnostic  tests,  which measure electrical activity in nerves and muscles. Their suspicions turned out to be well founded. Over and over in their undercover visits, Awerbuch used needles and probes that may have looked right to patients, but the exams were bogus—a brief pantomime performed for show. Sometimes the needles and probes weren’t even connected to a machine.

Agents at the U.S. Department of Health and Human Services Office of Inspector General, or HHS–OIG, see a lot of insurance fraud like this. It’s a major drain on federal programs. Some doctors look at the checks that come back from Medicare or Medicaid when they invoice for testing and they get ideas: Who would know if the tests they administered were even real? They might rationalize their cheating with the thought that the patients aren’t getting hurt.

But prescribing Subsys for moderate back pain—that was some- thing different. Awerbuch’s permissiveness with opioids had already raised flags, but the HHS–OIG special agent on the case, Marc Heggemeyer, straightened up and took notice when Subsys appeared unprompted in that undercover visit. “That was where we first started really drilling into it, the amount he was prescribing,” he recalled. “Because once you did the research on that drug, it was like, ‘Whoa, this is serious stuff.’ ”

The liquid in the Subsys spray bottle that Awerbuch held in his hand was fentanyl. For decades after it was first synthesized in 1960, fentanyl had been approved only for patients under medical supervision, in hospital settings. Subsys doses are measured in micrograms— one-millionth of a gram—because fentanyl is up to a hundred times as powerful as morphine, and roughly fifty times as potent as heroin. At the time of the investigation, illicitly manufactured fentanyl, often pressed into counterfeit pills or spiked into heroin, was starting to become the leading culprit in the opioid crisis, the deadliest drug epidemic in American history. By 2017, fentanyl and its analogs would be implicated in more than half of all opioid fatalities.

Subsys had been approved by the Food and Drug Administration solely to treat a relatively small group of people in dire circumstances: cancer patients who are already taking an around-the-clock regimen of opioids but still suffering from so-called breakthrough cancer pain. The term refers to spikes of pain that pierce through the protection of a longer-acting painkiller such as OxyContin. Drugs in Subsys’s class are valuable for this use because they’re fast. They can combat pain so severe that the patient might otherwise go to the emergency room. They can give comfort to a person near the end of life.

The narrow profile of this powerful drug was not stopping Dr. Awerbuch from handing out an extraordinary number of Subsys prescriptions.

—

Heggemeyer and a special agent at the Federal Bureau of Investigation, Travis Lloyd, set out together to interview some of Awerbuch’s Subsys patients. They were disturbed by what they found.

They visited a young mother named Kendra. She was a tall woman in her early twenties, with a narrow face, light-colored hair, and a wispy voice. It took her some time to answer the door. She seemed worried that she was in trouble. In the family room of her small house, the two agents sat on one wing of an L-shaped couch while she sat on the other. Little natural light penetrated the room.

Awerbuch had treated Kendra’s mother, who was glad to find him after she had been passed around by other providers. Kendra had gone to the doctor complaining of back and neck problems stemming from a car crash, among other chronic  conditions.  She had  never had cancer, nor did she know that Subsys was only approved to treat cancer pain, she said. She gazed at the agents with glassy eyes, they recalled. It was as if she were looking through them. They asked for her driver’s license. “The young woman in the photo was not the person we saw sitting before us,” Lloyd recalled. “It looked like the life had been drawn from her face.” Across the room, a young girl played at a toy kitchen. They worried for the child.

Heggemeyer sensed that Kendra was initially hesitant to implicate Awerbuch. They wondered if she didn’t want the prescriptions to stop coming. This became a recurring issue in their interviews; patients were protective of Awerbuch, for a range of reasons. They seemed loyal to the doctor they thought they knew.

When the agents went to see another woman Awerbuch had put on Subsys, however, her husband had no problem condemning the doctor. He was furious. Awerbuch had kept feeding his wife opioids, he said, until finally she had to go into an inpatient facility in Pontiac for eight days and then into rehab. She had only just come back. She was around fifty and had been seeing Awerbuch for years, complaining of a litany of medical issues and a pain that never seemed to improve. It wasn’t clear what the core problem was; she didn’t have cancer. The Subsys was too much for her, her husband said. It made her incoherent, unable  to  function.  The woman  herself  didn’t  say much at all, though she later acknowledged that she had passed out twice in the linen closet, facedown. It was the dog who found her there.

When authorities see suspicious prescribing of opioids, it typically involves high volumes of widely known drugs, usually containing oxycodone (branded as OxyContin, Roxicodone, Percocet) or hydrocodone (Vicodin, Lortab). These products are household names, and patients ask for them. Awerbuch often prescribed the drugs that patients requested, which can be a way of keeping people coming back for more appointments and lucrative procedures. But no one was asking for Subsys. Almost no one had even heard of it at the time.

Subsys is not only more powerful than most painkillers; it is also far rarer, and much more expensive. A typical prescription in 2013 ranged from approximately $3,000 to $17,000 a month, depending on the dosage. Medicare paid over $70,000 for one Awerbuch patient’s Subsys supply over a ten-month period.

Persuading insurance companies to cover Subsys was an elaborate process. With such a potent and costly drug, most insurers required prior authorization before they would pay for it. For staff at a clinic, the paperwork could be a time-consuming hassle. Yet Awerbuch was opting to go through with it time and again.

Authorities were gathering that Awerbuch was working a number of different financial angles, that the fraudulent tests were only a piece of the puzzle. But the Subsys bit was hard to figure out at first. Why run this kind of risk?

But Awerbuch’s motives weren’t the most urgent matter. Investigators were worried about “how deadly that drug can be,” Heggemeyer said, and who was getting it from him. “We had to do something.”

 

ON MAY 6 , 2014, not long after the clinic in Saginaw opened in the morning, law-enforcement vehicles swarmed the parking lot. More than a dozen agents came through the doors. They began clearing people out of the waiting room and boxing up medical charts for removal.

Heggemeyer and Lloyd confronted Awerbuch to tell him they had a search warrant and that he was under arrest. He was accused of health-care fraud and of prescribing Subsys without a legitimate medical purpose.

Awerbuch was quiet and defeated, apparently not shocked by this development. “As soon as he saw us, he knew,” Heggemeyer said.

By this point, Awerbuch was well aware that he was being watched. The two agents and their colleagues had already executed a search warrant on Awerbuch’s house and clinic early in their probe, before Subsys was even on the market. During that search, the investigators found that the man who came to the office in rumpled clothes led a different life at home. He lived in a six-thousand-square-foot lakefront house on a cul-de-sac in West Bloomfield, a prosperous Detroit suburb a world away from Saginaw. The doctor drove his modest Chevy to work, but stored in his garage was a 2005 Lotus Elise, a rare British sports car so low to the road that it looks like a go-kart. Awerbuch also owned an extensive collection of rare coins, stamps, and sports cards, stashed all around the house and in safe- deposit boxes. When agents were searching his clinic, they signed for a FedEx package of collectible coins and medals sent from overseas that happened to arrive for the doctor.

When the two lead agents arrested him that day in 2014, they led him away from his patients, into his personal office, so as not to embarrass him. They didn’t want to alienate him; they wanted to bring him around. They asked Awerbuch if he would be willing to talk to another set of investigators who were waiting for him down in Detroit. For the Department of Justice, there was an endgame here that was bigger than just one doctor.

 

AFTER AWERBUCH HAD his initial appearance in court that afternoon, in downtown Detroit, he crossed the street to the offices of the U.S. Attorney. Waiting for him in a conference room were three people who had flown in from Boston, including an FBI special agent named Paul Baumrind. The timing of the arrest had been coordinated so that they could be there to try to talk to Awerbuch. The Boston group had nothing to do with prosecuting the doctor, but his arrest represented a big moment for them. He was a potential asset to their own investigation, which had national implications. They were pursuing an entire drug company.

The agents wanted to know what Awerbuch had to say about a pharmaceutical manufacturer called Insys Therapeutics. Insys was a small but highly successful startup, led by an Indian-born visionary founder named John Kapoor. The Arizona-based firm had grown at an enormous rate in the preceding two years. After going public the previous May, Insys had become the best-performing initial public offering of 2013, on a gain of over 400 percent. Investors were thrilled with the skyrocketing sales numbers, which came almost entirely from one source: Subsys. It was the only branded product the company marketed. The CEO, Michael Babich, had held up that little plastic fentanyl spray bottle on CNBC a few months before, in an interview about the incredible run of Insys’s stock. Boston investigators knew that Awerbuch had a close relationship with the company, but they were looking for details. In secret, he began to provide them. A few days later, Awerbuch called Baumrind and told him that something unexpected had happened. With the media reporting that the doctor had been criminally charged with overprescribing Insys’s flagship drug, the company was distancing itself from him in the public eye. But a top executive at Insys had just privately contacted him, Awerbuch told the FBI agent. The executive had said that he was going to be in the Detroit area, and he and some other Insys employees wanted to come see him and go out for a meal.

The executive was a man called Alec Burlakoff. Baumrind already knew the name well. It was coming up again and again in the Bos- ton team’s investigation. There was John Kapoor, the founder; Mike Babich, the CEO; and Alec Burlakoff, the leader of the Subsys sales effort. This was the trio of men at the top of Insys.

Kapoor was a relentless boss but at heart a scientist, a tinkerer delighted by innovation; Babich was his protégé and like Kapoor the first in his family to come so far; Burlakoff was a salesman with the gift of gab, unmanageable but a genius of persuasion. Together they and their growing company were a model of American entrepreneurship, overcoming obstacles with nimble decision making and unmatched hustle—just what the system is designed to reward in a country that generates more new drugs than any other.

The investigative pursuit of these men and their company would lay bare how that system really works, revealing in extraordinary detail the inner workings of the prescription-opioid machine. The story of Insys would span the nation, unfolding inside pain clinics and high-end restaurants, boardrooms and call centers, gentlemen’s clubs and Wall Street office towers, before culminating in Boston’s federal courthouse. The investigation would become a landmark event in the government’s efforts to hold the pharmaceutical industry accountable for its role in the spread of potent and addictive painkillers.

While a flood of prescription opioids has driven a national health crisis, the drug companies responsible, showered in riches, have been able to operate largely in secrecy, paying to settle cases that might otherwise crack open their ways of doing business. This time the story would be different. The Insys saga would afford an unprecedented view into the marketing of painkillers in the midst of a deadly epidemic.

All of this would take years to unfold. When Awerbuch was arrested, it was still the early days. Burlakoff’s impending visit held out the prospect of a major break.

 

The FBI agent was amazed to hear that Insys’s sales chief was headed to see a doctor who had just been arrested. He told Awerbuch to accept the invitation. When the doctor showed up at the meal, Baumrind told him, he was going to be wearing a wire.

US

Additional information

Weight	21.2 oz
Dimensions	1.0700 × 6.5000 × 9.5300 in
Imprint	Doubleday
Format	General Trade
ISBN-13	09780385544900
ISBN-10	0385544901
Author	Evan Hughes
Audience	General / adult
BISAC	BUS070130, BUS008000
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