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Drug Manufacturer Cites 'Increased National Scrutiny of Prescription of Opioids' In Bankruptcy Filing
11 Jun, 2019 Nancy Grover
Wilmington, DE (WorkersCompensation.com) – A hearing is scheduled for 10:30 a.m. today in U.S. Bankruptcy Court to address motions related to Insys Therapeutics. The opioid manufacturer’s Chapter 11 filing yesterday represents the first time a company has sought bankruptcy protection related to the opioid crisis.
The company, which produces the fentanyl spray Subsys had agreed last week to a $225 million settlement with the U.S. government over allegations it bribed doctors to prescribe opioids. Chapter 11 would allow the company to continue operations while it determines how to pay the settlement and other obligations.
Company founder John Kapoor and four former executives and managers had recently been found guilty of engaging in a racketeering conspiracy by a federal jury in Boston. In court papers, recently-named CEO Andrew G. Long cited the convictions and the opioid crisis as reasons for the filing.
“…over the last few years, the Debtors’ revenues from Subsys have been declining rapidly as a result of the increased national scrutiny of prescription of opioids by healthcare professionals, the resulting high-profile political and legal actions taken against manufacturers and distributors of opioids, and the specific news relating to the former executives’ criminal activity,” he wrote. “As a smaller company than some other opioid manufacturers, with over 90% of its current revenue coming from the sale of opioids, Insys could not withstand the concurrent negative impact of massive litigation costs and significant opioid revenue deterioration. These factors have caused a substantial cash drain on the company to the point where, despite the Debtors’ best efforts, they risk running out of cash in 2019.”
The company is seeking bankruptcy protection to “facilitate the sale of substantially all of the Company’s assets and address the Company’s legacy legal liabilities,” the court documents show. “INSYS intends to continue operating its business in the ordinary course while it pursues these transactions through the court-supervised sale process.”
Among the documents filed yesterday were several First Day Motions, including the authority to maintain its cash management system and other customary relief. The bankruptcy court will consider those motions today.
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About The Author
About The Author
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Nancy Grover
Nancy Grover is a freelance writer having recently retired as the Director, Media Services for WorkersCompensation.com. She comes to our company with more than 35 years as a broadcast journalist and communications consultant. Grover’s specialties include insurance, workers’ compensation, financial services, substance abuse, healthcare and disability. For 12 years she served as the Program Chair of the National Workers’ Compensation and Disability Conference® & Expo. A journalism/speech graduate of Ohio Wesleyan University, Grover also holds an MBA from Palm Beach Atlantic University.
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