Selling drugs is a relationship business. It’s best to do it in person. That is why, on a summer evening in 2012, Alec Burlakoff was out for dinner with Steven Chun, the owner of Sarasota Pain Associates. Burlakoff was a sales manager for Insys Therapeutics, an Arizona-based pharmaceutical company with only one branded product, a new and highly potent opioid painkiller called Subsys. Chun was a doctor who prescribed a lot of opioids.
The location was a moderately expensive seafood restaurant in Sarasota, Fla., with linen tablecloths and large windows overlooking the bay. The sun was still high in the sky. Gleaming powerboats lined the docks outside, and a warm breeze rippled the water. On one side of the table were Burlakoff and Tracy Krane, an Insys sales representative. Krane was a newcomer to the industry, tall with dark brown hair in a bob. Burlakoff, then 38, with a slight frame and a boyish restlessness, was her new boss. He had years of experience in the opioid market. Colleagues marveled over his shameless push to make the sale, but he had a charisma that was hard to resist. Even people who didn’t trust him couldn’t help liking him.
Krane was there to learn the business, and the meeting made a vivid impression. Chun, then 49 and stout, had impeccable credentials: He was trained at the University of Washington, Cornell Medical College and the Memorial Sloan Kettering Cancer Center. He had been married at the Fifth Avenue Presbyterian Church in Manhattan, to a Juilliard-trained violinist who is the daughter of a former chief executive of Korean Air, but had since divorced. At Burlakoff’s invitation, he had brought his girlfriend at the time, a woman in her mid-20s, to dinner.
For Insys, Chun was just the right kind of doctor to pursue. In the late 1990s, sales of prescription opioids began a steep climb. But by the time Subsys came to market in 2012, mounting regulatory scrutiny and changing medical opinion were thinning the ranks of prolific opioid prescribers. Chun was one of the holdouts, a true believer in treating pain with narcotics. He operated a busy practice, and 95 percent of the Medicare patients he saw in 2015 had at least one opioid script filled. Chun was also a top prescriber of a small class of painkillers whose active ingredient is fentanyl, which is 50 to 100 times as powerful as morphine. Burlakoff’s product was a new entry to that class. On a “target list,” derived from industry data that circulated internally at Insys, Chun was placed at No. 3. The word inside the company for a doctor like Chun was a “whale.”
In the few months since Subsys was introduced, demand was not meeting expectations. Some of the sales staff had already been fired. If Burlakoff and Krane could persuade Chun to become a Subsys loyalist, it would be a coup for them and for the entire company. The drug was so expensive that a single clinic, led by a motivated doctor, could generate millions of dollars in revenue.
Over dinner, Burlakoff grew expansive, Krane recalled. She marveled at the way he drew on a wealth of information about the doctor — intelligence gathered over the course of years — without letting on just how much he knew. Before he worked for Insys, Burlakoff worked for Cephalon, Insys’s chief competitor, and he knew a bit about Chun’s romantic history, Krane said. He also knew that Chun liked to visit the casinos up in Tampa, so Burlakoff made a point of talking about his own penchant for gambling, according to Krane. She had no idea if he was telling the truth.
It is unclear whether Burlakoff knew that Chun was also, at that moment, in the middle of an expensive legal battle. The previous year, two nurses who formerly worked for him secretly filed a whistle-blower suit charging “widespread billing schemes” intended to defraud the government, and federal agents executed a search warrant on his clinic. (Chun would later pay $750,000 to the Department of Justice to resolve the claims. He was never charged with a crime and denies all wrongdoing.)
What is clear is that Burlakoff thought that Chun was a tremendous prize. After briefly extolling the virtues of Subsys, Krane recalled, Burlakoff finally arrived at the true purpose of the dinner. He had a proposition to make. Insys wanted to sign Chun up, he said, for the company’s speaker program, which was just getting underway.
Speaker programs are a widely used marketing tool in the pharmaceutical business. Drug makers enlist doctors to give paid talks about the benefits of a product to other potential prescribers, at a clinic or over dinner in a private room at a restaurant. But Krane and some fellow rookie reps were already getting a clear message from Burlakoff, she said, that his idea of a speaker program was something else, and they were concerned: It sounded a lot like a bribery scheme.
Burlakoff left the dinner in a great mood, Krane said, confident that Chun would come on board. The doctor did become an Insys speaker later that year, and sales did improve, not only in Chun’s Florida office but also around the country, as more doctors signed on. By the next year, according to the company, net revenue from Subsys sales would increase by more than 1,000 percent, to $95.7 million.
But the new reps were right to be worried. The Insys speaker program was central to Insys’ rapid rise as a Wall Street darling, and it was also central to the onslaught of legal troubles that now surround the company. Most notable, seven former top executives, including Burlakoff and the billionaire founder of Insys, John Kapoor, now await trial on racketeering charges in federal court in Boston. The company itself, remarkably, is still operating.
The reporting for this article involved interviews with, among other sources, seven former Insys employees, among them sales managers, sales reps and an insurance-authorization employee, some of whom have testified before a grand jury about what they witnessed. This account also draws on filings from a galaxy of Insys-related litigation: civil suits filed by state attorneys general, whistle-blower and shareholder suits and federal criminal cases. Some are pending, while others have led to settlements, plea deals and guilty verdicts.
In the Insys case, prosecutors are looking to break new ground in holding the pharmaceutical and medical industry accountable in connection with the current opioid crisis. They’re attacking both ends of the pharma sales transaction; 11 prescribers face charges or have been convicted over their ties to Insys, and Chun has recently been subpoenaed for medical records related to Subsys. In looking into Insys’s relationship to providers like him, investigators are revealing just how opioids are sold at the point they first enter the national bloodstream — in the doctor’s office.
THE OPIOID CRISIS, now the deadliest drug epidemic in American history, has evolved significantly over the course of the last two decades. What began as a sharp rise in prescription-drug overdoses has been eclipsed by a terrifying spike in deaths driven primarily by illicitly manufactured synthetic opioids and heroin, with overall opioid deaths climbing to 42,249 in 2016 from 33,091 in 2015. But prescription drugs and the marketing programs that fuel their sales remain an important contributor to the larger crisis. Heroin accounted for roughly 15,000 of the opioid deaths in 2016, for instance, but as many as four out of five heroin users started out by misusing prescription opioids.
By the time Subsys arrived in 2012, the pharmaceutical industry had been battling authorities for years over its role in promoting the spread of addictive painkillers. The authorities were trying to confine opioids to a select population of pain patients who desperately needed them, but manufacturers were pushing legal boundaries — sometimes to the breaking point — to get their products out to a wider market.