- Facing more than $4 billion in claims from 8,000-plus filings, Insys Therapeutics does not expect to come close to fulfilling all outstanding demands, but has proposed a path forward in bankruptcy court anyway.
- Insys filed for Chapter 11 bankruptcy protection in June, shortly after multiple company executives were convicted on criminal racketeering charges related to the marketing of its fentanyl spray, Subsys. Now, the drugmaker is working in bankruptcy court to sort through the leftover damage.
- On Sept. 17, Insys filed a proposed liquidation plan with the court that acknowledged its financial shortcomings. The company estimated it is facing more than $4 billion in claims — "far outstripping" the company's ability to pay — and anticipated Insys' assets "will be insufficient, by a wide margin, to satisfy unsecured claims," the company wrote in a filing.
This year, the repercussions for opioid drugmakers have begun to come due. Johnson & Johnson was ordered to pay $572 million by an Oklahoma judge, Purdue Pharma filed for bankruptcy amid talks of a multi-billion dollar settlement, and Mallinckrodt's stock hit all-time lows amid concerns of its mounting liabilities.
One of the most significant pieces of litigation has yet to begin, with a multi-district case set to start trial on Oct. 21 in Ohio.
Insys' financial peril, then, is another warning of the potential reckoning facing larger industry sellers of the pain-killing drugs.
Insys is a smaller player in the opioid market, but gained notoriety for the aggressive and illegal marketing of its sublingual fentanyl spray Subsys — tactics that landed several of its leaders in federal court.
Throughout August, the pharma has worked with creditors to develop a Chapter 11 plan. "Though the mediation was not 100% successful, by early September, the Debtors reached consensus and settlement" with certain claims, the company stated.
The thousands of claims against the company are from a wide range of public and private parties: trade creditors seeking money for employee indemnification and contract rejection damages; families of addicted individuals and children with neonatal abstinence syndrome with claims of bodily injury, addiction or wrongful death; and insurance providers alleging fraud related to Subsys prescriptions.
Many of these claims will be impaired by Insys' lack of assets, including the Justice Department, which reached a $225 million settlement in June to resolve all criminal and civil investigations.
Insys' bankruptcy plan does not estimate how much it anticipates being able to pay for those impaired claims, including the DOJ, hospitals and insurers.
Through an asset sale, though, Subsys will live on with another corporate owner. On Sept. 1, the pharma agreed to sell Subsys to Wyoming-based BTcP Pharma, and the court on Thursday approved that deal.
The bankruptcy court has scheduled a hearing to consider the liquidation plan for Oct. 22.