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.
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.
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.
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