Opioid manufacturer in kickback scheme files for bankruptcy
Jun 13 2019
Buckling under the weight of opioid lawsuits, INSYS Therapeutics (NASDAQ:INSY) has filed for Chapter 11 bankruptcy and will sell substantially all of its assets.
Insys founder John N. Kapoor, center, leaves the John Joseph Moakley United States Courthouse in Boston on May 2, 2019.
"After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximize the value of our assets and address our legacy legal challenges in a fair and transparent manner", CEO Andrew Long said in a statement.
The filing in U.S. Bankruptcy Court in the District of DE made Insys the first drug manufacturer to turn to bankruptcy due to legal expenses brought on by accusations of responsibility in the deadly U.S. opioid epidemic.
In addition, the company will also be forced to pay $195 million to settle allegations it breached the federal False Claims Act by defrauding the federal government through health care programs such as Medicare. The sublingual spray was developed as a pain management drug for adult cancer patients who are already tolerant to around-the-clock opioid therapy.
Prosecutors said Insys used sham "speaker programs" as a vehicle to pay bribes and kickbacks to practitioners in exchange for prescribing Subsys and increasing the dosage of prescriptions. Besides, the bankruptcy filing came after a few days the Arizona-based drugmaker had settled a $225 million dispute with the US Justice Departments, while hundreds of such disputes had been hanging fires. In each case, the plaintiffs contend drug companies marketed opioid painkillers to doctors without revealing their addictive potential.