Insys files bankruptcy to cover opioid penalties

Insys Therapeutics filed for Chapter 11 protection on Monday, one week after agreeing to pay $225 million to resolve a federal investigation into a bribery scheme designed to induce doctors to overprescribe its highly addictive fentanyl spray.

This marks the first time a drugmaker has turned bankruptcy court over legal expenses incurred by its role in the nation’s deadly opioid epidemic.

“For years, Insys engaged in prolonged, illegal conduct that prioritized its profits over the health of the thousands of patients who relied on it,” U.S. Attorney Andrew Lelling in Boston said in a statement after the settlement was announced last week. “Today, the company is being held responsible for that and for its role in fueling the opioid epidemic.”

The painkiller in question, Subsys, is an underthe-tongue spray the Food and Drug Administration approved in 2012 to treat cancer patients. Fentanyl is a synthetic opioid 50 to 100 times more powerful than morphine. In 2017, the U.S. saw more than 28,000 synthetic opioid-involved deaths, according to the Centers for Disease Control and Prevention, more than any other type of opioid.

In early May, a federal jury in Boston found Insys’ billionaire founder John Kapoor and four ex-executives guilty of racketeering, after the 10-week trial revealed they had used speaker’s fees and lap dances to lure doctors into prescribing Subsys for far more patients than the drug was approved for and cheated insurers into covering prescriptions for the costly medication.

In a news release, the U.S. Department of Justice outlined how the scheme worked. A physician assistant at a New Hampshire pain clinic joined Insys’s program the second year the drug was on the market. The PA, who was not named, went from writing zero prescriptions the first year the painkiller was on the market to issuing 672 the second year. He received $44,000 in kickbacks, prosecutors said.