Drug company Insys files for bankruptcy – By Andrew Martinez (Boston Herald) / June 10 2019
Owes government $225M in opioid bribery scheme
The drug company Insys Therapeutics filed for Chapter 11 bankruptcy Monday, days after pleading guilty to fraud charges in an opioid bribery scheme and agreeing to pay $225 million in penalties.
The Chandler, Ariz.,-based company said in a release it will continue to operate its business while it pursues transactions through a court-supervised sale.
Insys CEO Andrew Long said the move is the best course of action to “address our legacy legal challenges in a fair and transparent manner.”
On Friday, Insys’ operating unit pleaded guilty in a scheme to pay bribes and kickbacks to doctors in exchange for increased prescriptions of a highly addictive fentanyl spray known as Subsys. The company agreed to pay $30 million for five counts of mail fraud and $195 million in a civil resolution.
A stipulation between Insys Therapeutics and the United States in the filing caps the total amount owed at $195 million, including $5 million paid before the filing.
Company founder John Kapoor, listed as owning 63.2% of Insys stock, was convicted last month in a racketeering conspiracy along with four other former employees in the bribery scheme.
According to the conviction, company officials bribed doctors prescribing Subsys with fees for sham speaking events billed as educational opportunities. Most events were held at high-priced restaurants and had fabricated guest lists, according to prosecutors.
Insys tracked the return on their bribes by monitoring Subsys prescription habits, and would take away speaking event opportunities from practitioners accordingly, prosecutors said.
The company owes nearly $14 million for Kapoor’s lawyer alone, and an additional $2 million for counsel for other Insys employees, according to the bankruptcy filing.
Kapoor and the other convicted company officials are scheduled to be sentenced in September in Boston.
In a quarterly filing last month, the company said it had just $87 million in cash and investments, and liabilities of approximately $240 million at the end of March. In the bankruptcy documents, the company lists $175 million in total assets and total debts over $262 million as of March 31.
The company’s stock sunk 51% Monday on news of the bankruptcy, closing at just $.64 a share.
Insys Therapeutics founder John Kapoor departs federal court, in Boston, Wednesday, Jan. 30, 2019. A federal prosecutor told jurors Monday that Kapoor plotted to bribe doctors across the country to prescribe a highly addictive fentanyl spray in order to outshine competitors and line his own pockets. Kapoor is the highest-level pharmaceutical figure to face trial amid the opioid epidemic that’s claiming thousands of lives every year. (AP Photo/Steven Senne)
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