Just five days after agreeing to pay 225 million dollars to settle the federal government’s criminal and civil case, opioid manufacturer Insys Therapeutics filed for Chapter 11 bankruptcy, putting the actual dollar amount the government receives from the company in jeopardy.
Why Did Insys Settle the Case?
The federal government accused Insys of bribing doctors and using other seedy tactics to help market its drug, fentanyl. In 2011 and 2012, about 1,600 deaths a year were attributed to fentanyl overdoses. As the drug became more widely prescribed, deadly overdoses began to rise, with nearly 18,000 in 2016, according to statistics from the U.S. Centers for Disease Control and Prevention’s National Center for Health Statistics.
Fentanyl is about 50 times stronger than morphine. It is often cut into other drugs to make them more powerful and addictive, often with devastating consequences, including overdose deaths.
Insys admitted to bribing doctors and using unfair and illegal tactics to push more sales of the drug.
Why is Insys Bankrupt?
Insys told reporters that, “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.”
The company listed $175 million in assets and $262.5 million in debt as of March 31. The company’s founder, who also has legal expenses, will have his legal fees paid out of the company’s coffers.
The opioid lawsuits that manufacturers and distributors across the US are unprecedented; there are thousands of them. They’re often compared to the lawsuits against cigarette makers in the 1990s, but there are far more players, companies, and complaints involved.
Under Chapter 11 protection, Insys’s doors will stay open. They will be able to continue paying employees and vendors as they make decisions to pay more legal expenses related to litigation.