Insys founder John N. Kapoor, center, leaves the John Joseph Moakley United States Courthouse in Boston on May 2, 2019.
An opioid drugmaker whose former executives were convicted last month in a scheme to illegally influence doctors to prescribe its drug and that reached a nearly quarter of $1 billion settlement last week is filing for bankruptcy.
Phoenix-based Insys Therapeutics said Monday it would sell “substantially all” of its assets under Chapter 11. Last week, the company and the Department of Justice agreed to settle civil and criminal investigations into its alleged scheme to bribe doctors to prescribe its cancer pain drug, Subsys – a form of fentanyl sprayed under the tongue – in exchange for kickbacks. Under the settlement, Insys must pay $225 million and admit to illegal promotion of the drug.
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Shares of the company were down more than 50 percent on the Nasdaq Monday afternoon following the announcement, having fallen from $1.31 when markets opened to as low as 56 cents per share.
“After conducting a thorough review of available strategic alternatives, we determined that a court-supervised sale process is the best course of action to maximize the value of our assets and address our legacy legal challenges in a fair and transparent manner,” Insys CEO Andrew Long said in a statement.
According to the announcement of the settlement Wednesday, the U.S. Attorney’s Office for the District of Massachusetts also filed charges against Insys and a subsidiary with five counts of mail fraud. It is alleged that between August 2012 and June 2015, the company used “speaker programs” to purportedly increase brand awareness of the drug via lunches and dinners that were actually used to pay bribes and kickbacks to physicians in exchange for increasing prescriptions of Subsys. For example, a physician’s assistant in New Hampshire allegedly joined the speaker program and wrote 672 Subsys prescriptions for patients, many of them medically unnecessary, in exchange for $44,000 in kickbacks.
Last month, five former executives of Insys – including founder John Kapoor – were convicted of criminal charges in the U.S. District Court for the District of Massachusetts in connection with the alleged scheme. According to Insys’ financial records, sales of Subsys went from $3.7 million during the first nine months of 2012 to $329.5 million in fiscal year 2015.
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Photo: Jonathan Wiggs, Getty Images
