(Reuters) – Drugmaker Insys Therapeutics Inc filed for bankruptcy protection on Monday amid mounting expenses driven by a U.S. Justice Department probe into claims it paid doctors bribes to prescribe a powerful opioid medication.
FILE PHOTO: John Kapoor, the billionaire founder of Insys Therapeutics Inc, leaves the federal courthouse in Boston, Massachusetts, U.S., March 13, 2019. REUTERS/Brian Snyder/File Photo
The Chapter 11 bankruptcy filing marked a first for a drugmaker accused in lawsuits of helping fuel the deadly U.S. opioid endemic and came just days after Insys struck a $225 million settlement with the Justice Department.
The department is now Insys’ largest unsecured creditor due to Wednesday’s accord, which resulted in a subsidiary pleading guilty to fraud charges and the company entering into a deferred prosecution agreement.
The bankruptcy filing came after a federal jury in Boston in May found Insys founder John Kapoor and four other former executives guilty of engaging in a racketeering conspiracy centered on its fentanyl spray, Subsys.
Chandler, Arizona-based Insys said it filed for bankruptcy in U.S. Bankruptcy Court in the District of Delaware to facilitate a sale of its assets, including Subsys.
Insys listed $175.1 million in assets and $262.5 million in debt as of March 31. Shares of Insys fell 66% to 44 cents in premarket trading.
Subsys is an under-the-tongue spray the U.S. Food and Drug Administration approved in 2012 for treating pain in cancer patients. It contains fentanyl, an opioid 100 times stronger than morphine.
Prosecutors alleged that while Kapoor was its chairman, Insys from 2012 to 2015 used sham “speaker programs” as a means to pay doctors bribes to prescribe Subsys to patients, many of whom did not have cancer.
Subsys’ net revenues during that time grew from $8.6 million in 2012 to $329 million in 2015.
The Justice Department probe led to multiple people being charged including Kapoor, Insys’ majority shareholder, in October 2017 on the same day U.S. President Donald Trump declared the opioid crisis a public health emergency.
Opioids were involved in a record 47,600 U.S. overdose deaths in 2017, the U.S. Centers for Disease Control and Prevention has said.
In a bankruptcy court filing, Insys Chief Executive Andrew Long said sales of Subsys have declined substantially due to increased national scrutiny of opioid prescribing.
He said that sales decline was more than Insys could withstand when coupled with the investigation and more than 1,000 lawsuits by municipal governments seeking to hold it responsible for the epidemic.
Other opioid manufactures are facing similar lawsuits, including OxyContin maker Purdue Pharma, which has considered filing for bankruptcy amid the litigation.
Reporting by Nate Raymond in Boston; Additional reporting by Manas Mishra and Tamara Mathias in Bengaluru; Editing by David Gregorio, Anil D’Silva and Tom Brown