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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