Five US states agree to sus­pend lit­i­ga­tion against bank­rupt opi­oid mak­er In­sys — re­port

While fil­ing for bank­rupt­cy last month, con­tro­ver­sial drug­mak­er In­sys sought an in­junc­tion against law­suits al­leg­ing the com­pa­ny stoked the opi­oid cri­sis. Five states have now re­port­ed­ly dropped their ob­jec­tions to that re­quest, and agreed to fa­cil­i­tate set­tle­ment talks.

John Kapoor In­sys

In­sys’ $IN­SY bank­rupt­cy fil­ing came days af­ter the com­pa­ny agreed to pay $225 mil­lion to set­tle the US gov­ern­ment’s sep­a­rate crim­i­nal and civ­il in­ves­ti­ga­tions re­lat­ed to its spray, Sub­sys — about a month af­ter its founder and for­mer se­nior ex­ec­u­tive team were found guilty by a fed­er­al ju­ry of rack­e­teer­ing. Founder John Kapoor and his four com­pa­tri­ots’ an­tics in­clud­ed brib­ing doc­tors to pre­scribe the po­tent, ad­dic­tive painkiller and dup­ing in­sur­ers in­to pay­ing for the dead­ly opi­oid drug.

Sub­sys — which is made of fen­tanyl, the man-made opi­oid 50 times more po­tent than hero­in and 100 times more po­tent than mor­phine — was ap­proved in 2012 by the FDA for break­through can­cer pain. Pros­e­cu­tors charged the for­mer In­sys ex­ec­u­tives with in­flat­ing Sub­sys sales by brib­ing doc­tors to pre­scribe the drug to pa­tients with­out can­cer — in an elab­o­rate scheme that in­clud­ed win­ing and din­ing physi­cians, pay­ing them to speak at “ed­u­ca­tion­al events” — there­by fu­el­ing the rag­ing opi­oid cri­sis that kills 130 Amer­i­cans every day. Ju­rors at the tri­al were giv­en a front-row seat to the video en­gi­neered to train the com­pa­ny’s sales reps, in which two im­pec­ca­bly suit­ed men, os­ten­si­bly In­sys em­ploy­ees, rapped about com­pa­ny busi­ness strat­e­gy: “I love titra­tions. Yeah, that’s not a prob­lem. I got new pa­tients, and I got a lot of ‘em…If you want to be great, lis­ten to my voice. You can be great — but it’s your choice.”

Al­though fil­ing for Chap­ter 11 typ­i­cal­ly freezes ac­tive lit­i­ga­tion against a firm while it re­or­ga­nizes, a caveat al­lows law­suits to pro­ceed in cer­tain cas­es. Ac­cord­ing to a re­port by Reuters, Mary­land, Min­neso­ta, New York, New Jer­sey and Ari­zona coun­tered In­sys’ bid on the ba­sis of that ex­cep­tion.

Kevin Gross Fed­er­al Bar As­so­ci­a­tion

How­ev­er, at a hear­ing on Tues­day a lawyer for In­sys told the US Bank­rupt­cy Judge, Kevin Gross, that the five states, in ad­di­tion to North Car­oli­na, had “agreed to stay their cas­es in or­der to sup­port a set­tle­ment ne­go­ti­a­tion pro­to­col,” Reuters re­port­ed.

“(T)he States un­der­stand that they are on­ly go­ing to be paid in lit­tle bank­rupt­cy dol­lars. For this rea­son they are will­ing to agree to a fix the claim and not waste time and re­sources to fight for a claim of which they will on­ly re­ceive a small per­cent­age pay­ment,” Er­ic Sny­der of NYC-based law firm Wilk Aus­lan­der told End­points News.

Oth­er cities and coun­ties pur­su­ing sim­i­lar cas­es against In­sys are not part of the deal, nor are sev­er­al states that had al­ready agreed to put their law­suits on hold, the re­port added.

Er­ic Sny­der Wilk Aus­lan­der

In­sys is hard­ly the on­ly opi­oid drug mak­er in fi­nan­cial trou­ble. Pur­due Phar­ma — the mak­er of one of the most wide­ly abused pre­scrip­tion opi­oid painkiller Oxy­con­tin — is re­port­ed­ly con­sid­er­ing bank­rupt­cy. Mean­while, oth­er drug man­u­fac­tur­ers, dis­trib­u­tors and phar­ma­cies are al­so fac­ing hun­dreds of civ­il law­suits for their role in prop­a­gat­ing the opi­oid cri­sis.

The In­sys mo­tion could have in­flu­enced whether Pur­due — which it­self is fac­ing thou­sands of law­suits — de­cides to file for bank­rupt­cy pro­tec­tion, Reuters said, cit­ing a source and le­gal ex­perts.

If these types of ne­go­ti­a­tions are suc­cess­ful, there is lit­tle doubt Pur­due will file bank­rupt­cy and take the same route, said Sny­der, who serves as chair­man of his firm’s bank­rupt­cy de­part­ment. “(T)he sit­u­a­tion is daunt­ing with thou­sands of law­suits on the fed­er­al, state and pri­vate lev­el. So, the process of even iden­ti­fy­ing and fix­ing the claims will take years.”

So­cial im­age: John Kapoor. Steven Senne, AP

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2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

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Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

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