Insys Files For Bankruptcy After Paying $225 Million Settlement In US Probe
A week after it had agreed to pay a $225 million settlement to US regulators, Insys Therapeutics has announced that it will be filing for Chapter 11 bankruptcy protection. The drug manufacturer announced its plans this week and stated that it will be filing for bankruptcy at the Bankruptcy Court in the District of Delaware.
Insys is one of the first pharmaceutical companies that have filed for bankruptcy after incurring massive legal expenses related to the suits in the country's deadly opioid epidemic.
The firm was forced to pay a hefty fine last week after prosecutors found substantial evidence revealing how the drug maker was bribing doctors to prescribe its opioid medication.
One of the company's subsidiaries pleaded guilty to fraud charges earlier this month after being accused by the US Justice Department. Last month, a federal jury in Boston found Insys executives guilty of starting and participating in a wide-spread racketeering conspiracy.
Among those that were found guilty was the company's founder, John Kapoor.
Kapoor, who headed the company from 2012 to 2015, allegedly paid doctors and other medical staff bribes in order to get prescriptions for its fentanyl spray product called Subsys. The under-the-tongue spray was approved by the US Food and Drug Administration (FDA) in 2012. The spray is mainly used to alleviate pain in cancer patients. However, it has since become a favorite go-to drug for opioid addicts given that fentanyl is roughly 100 times stronger than morphine.
Some doctors, who were being paid by Insys, allegedly prescribed the product to patients who did not have cancer.
According to court documents, Kapoor along with other Insys executives had conducted sham events to promote their products. These events were hosted by medical practitioners who were being paid by the company. Through its various schemes and bribes, Insys was able to boost its Subsys sales significantly. Subsys sales shot up from $8.6 million in 2012 to $329 million in 2015.
The Justice Department's investigation into the company's practices has led to multiple charges against Insys employees. The agency recently ramped up its probe into US pharmaceutical company's following President Donald Trump's announcement that the opioid crisis in the United States has become a public health emergency.
Apart from Insys, drugmakers such as Purdue Pharma are also being investigated. Purdue, the producer of the opioid drug OxyContin, is currently facing more than 2,000 lawsuits in the United States. The company had stated that it is considering filing for bankruptcy due to the litigations.
Following news of Insys' plans of filing for bankruptcy, investors immediately dumped their shares of the company sending its stock prices downward. Insys shares fell by as much as 60 percent to 52 cents following the company's announcement.