Two years ago, the drug company Insys Therapeutics posted a quarter-billion dollars in annual sales. But the Arizona-based firm's fortunes plummeted so far that on Monday its leaders declared bankruptcy. It was the latest fall-out from the nation's prescription opioid epidemic, which has killed more than 200,000 Americans and triggered hundreds of lawsuits against Big Pharma.
Insys marketed an opioid pain medication called Subsys that included fentanyl. It generated tens of millions of dollar in annual sales. But like other prescription opioids marketed aggressively by the drug industry, it turned out to be highly addictive.
Many of the drug industry's biggest companies are tangled up in a wave of opioid litigation, including name brand companies Johnson & Johnson and CVS. It's unlikely large firms will follow Insys' lead and seek Chapter 11 protection, but smaller firms including Purdue Pharma, the maker of OxyContin, have already floated the possibility.
Attorneys representing hundreds of communities that hoped to win compensation from Insys issued a statement Monday saying they'll work to determine whether the company is actually insolvent. "We will actively pursue full financial disclosure for Insys and any other defendant that files for bankruptcy," the plaintiff group said.
They added that their goal in targeting 21 other drug firms isn't to put them out of business but to "abate the current opioid epidemic and seek long-term, sustainable solutions." State and local officials hope to recoup some of the billions of dollars they've spent responding to the opioid crisis.
One major state opioid trial is underway now in Oklahoma against Johnson & Johnson, with a second consolidated trial against other firms set to begin in October in Ohio. Judge Dan Polster, who's presiding over that federal case, has urged the parties to reach a settlement so communities receive some compensation without disrupting the pharmaceutical industry.
Sources tell NPR negotiations are underway but no deal has been reached.
In all, more than 1,800 state and local governments have filed opioid-related lawsuits. Penalties and settlements could run into the tens of billions of dollars, rivaling big tobacco payouts of the 1990s. The move by Insys came a week after the firm pleaded guilty to felony charges that it bribed doctors to prescribe its Subys fentanyl medication to patients who shouldn't have been using it.
The company agreed to pay the federal government $225 million in penalties. Last month, company founder John Kapoor, once a towering figure in the drug-tech industry, was found guilty on federal racketeering charges along with four other Insys executives. The company still faced numerous other opioid-related lawsuits.
In his statement, Insys CEO Andrew Long, said in a statement those "legacy legal challenges" contributed to the firm's decision to enter bankruptcy proceedings.
He said bankruptcy proceedings would allow the company to negotiate with creditors.
RACHEL MARTIN, HOST:
Just two years ago, the opioid manufacturer Insys posted a quarter of a billion dollars in sales. Now the Arizona-based company is declaring bankruptcy. Federal prosecutors played this video as evidence in a trial against Insys executives who were convicted last month.
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UNIDENTIFIED PERSON: (Rapping) Insys Therapeutics, that is our name. We're raising the bar, and we're changing the game. To be great, it takes a decision to be better than the competition. VIP service...
MARTIN: The 2015 video featured a person dressed up as a giant bottle of the company's fentanyl spray, and it was supposed to boost sales. The bankruptcy is the latest development in a string of lawsuits against Big Pharma as state and federal governments push for accountability for the opioid addiction crisis. North Country Public Radio's Brian Mann has been covering this story closely, and he joins us now.
So Brian, what happened to Insys?
BRIAN MANN, BYLINE: Yeah, these guys fell really far really fast. They marketed this medication substance that included fentanyl, their biggest product - tens of millions of dollars in sales. But it turns out, this prescription opioid, like so many others marketed aggressively by the drug industry, is really addictive, really risky. The company pleaded guilty to a series of felony charges, including claims they bribed doctors to prescribe their medication, pushing it to patients who should not have been using it. They're going to pay the federal government $225 million in penalties. And company founder John Kapoor and four other Insys executives were convicted last month on racketeering charges.
MARTIN: I mean, $225 million in penalties is a lot of money, but this is a multibillion-dollar corporation. So why did Insys need to file for bankruptcy?
MANN: Right. You know, what it is - out there is a lot of other opioid-related lawsuits pending against the company. In a statement yesterday, CEO Andrew Long described those as legacy legal challenges. And to cap all that, sales of their product have plummeted. So they've announced they'll go through bankruptcy proceedings, try to resolve all these liabilities and see what's left of the company.
MARTIN: I mean, there are some really big names who've been implicated in the opioids crisis. Right? Johnson & Johnson is one of them, pharmacies like CVS even. Are we going to see other bankruptcies down the road here?
MANN: Yeah. Big companies - Johnson & Johnson, McKesson, Walmart - they have really deep pockets, lots of assets. They're not likely to go this bankruptcy route. But executives, for example, at Purdue Pharma, the maker of OxyContin, they have already floated the possibility of bankruptcy. This is being talked about in courtrooms all over the country.
Remember now, Rachel; more than 1,800 state and local governments have filed these opioid-related lawsuits, so the penalties and settlements could run into the tens of billions of dollars, really rivaling those big tobacco settlements of the 1990s. And the question now is, how much can these companies pay to help clean up the opioid mess without putting them out of business?
MARTIN: Well, what about those people who had specific claims against Insys? I mean, does filing for bankruptcy let the company off the hook in paying those families or those victims of the crisis who filed suit?
MANN: Right. The team of attorneys representing a lot of those local governments issued a statement yesterday saying they're going to work now to find what assets remain at Insys that might still be sort of attached. But they say their goal is not to bankrupt these companies that they're targeting. They said they want to use settlements to ease the epidemic, seek what they call long-term sustainable solutions.
And one thing that's interesting here is the federal judge in Ohio who's overseeing a lot of these cases - a guy named Dan Polster - has been really outspoken, calling for some kind of a global negotiated settlement that will get money to communities suffering from this epidemic while also restoring stability to the drug industry. And so far, that kind of deal just hasn't happened.
MARTIN: Brian Mann with North Country Public Radio. Brian, thank you. We appreciate it.
MANN: Thank you so much. Transcript provided by NPR, Copyright NPR.