Chandler firm says deal is pending in opioid case
Insys Therapeutics said it has reached an agreement in principle with the federal government to settle an investigation of inappropriate sales practices by former employees, with the Chandler company slated to pay at least $150 million over five years.
The tentative agreement with the Department of Justice would settle racketeering charges that include allegations of paying kickbacks to doctors who prescribed the company’s fentanyl-based pain medication for cancer patients.
A host of other legal issues still remain.
In addition to the $150 million, Insys faces up to $75 million more in payments based on certain contingent events that were not described. A company spokesman declined to comment.
Insys stock, which has been battered in recent years as the company’s legal problems mushroomed, jumped $1.14 a share or 17 percent Wednesday, closing at $7.79.
Insys makes and sells cannabinoids and related sprays for delivering the medication to cancer patients quickly. The Department of Justice agreement in principle is subject to the negotiation of a final settlement.
“This is a very important step for our company to move forward and continue our transformative efforts to foster a compliant and ethical culture and to execute against our well-differentiated product pipeline, which we believe can bring value to patients globally,” said Saeed Motahari, Insys’ president and CEO, in a prepared statement.
The tentative settlement won’t clear all of the legal issues facing Insys, which include lawsuits and investigations ranging from allegations of improper sales practices and impermissible insurance reimbursements, to allegations that the company and others contributed to the national opioid epidemic.
Insys’ latest quarterly report 11 pages worth of summaries of subpoenas, lawsuits and investigations brought by the federal government, various states, insurers and other parties involving the company, former employees and healthcare practitioners.
The most visible incident was the arrest of John Kapoor, the company’s founder and majority owner, last October in Phoenix, when he was charged with facilitating the illegal distribution of a fentanyl spray intended for cancer patients and for violating anti-kickback laws.
Kapoor, who has said he is not guilty, is the company’s largest shareholder and formerly ranked among Arizona’s wealthiest residents, according to Forbes, which estimated his net worth above $2 billion as recently as 2016. Kapoor still has a January trial date in federal court in Boston over those charges, the Associated Press reported.