For Insys, infamy in two opioid crisis firsts: convicted founder and bankruptcy

insys-300x141Insys Therapeutics, a drug maker that peddled powerful and addictive painkillers in sordid ways, entered yet another phase of its penalties for its criminal conduct: The firm in quick fashion agreed first to pay $225 million to resolve federal bribery charges, then promptly sought bankruptcy protection.

Federal prosecutors, who earlier had won criminal racketeering convictions against the firm’s CEO and other Insys executives, emphasized that the Big Pharma firm hasn’t declared itself insolvent in its bankruptcy action and will pay up for damages caused by Susbsys, its chief product.

Subsys is a liquid containing the super potent painkiller fentanyl. It is administered as a drop under the tongue and was supposed to benefit cancer patients with grueling pain. Instead, Insys CEO John Kapoor “used speaker’s fees and lap dances to lure doctors into prescribing Subsys for far more patients than the drug was approved for and cheated insurers into covering prescriptions for the costly medication,” the Washington Post reported. Kapoor and other Insys execs await sentencing after their federal felony convictions.

Insys — which once raked in more than $300 million a year in revenue from Subsys and had the best-performing IPO of 2013 — has cut its ties with Kapoor and the others, with its current leadership saying they have hundreds of millions in liabilities, including lawsuits linked with their fentanyl product, with tens of millions of cash on hand. The firm will pay its employees, try to keep operating, and hopes the bankruptcy courts can assist it in sorting out its rocky finances, which included a reported loss last year exceeding $100 million. Insys already has pledged to divest itself of Subsys.

Andrew Lelling, the U.S. attorney in Massachusetts whose office led the legal takedown of Insys, commented on the bankruptcy filing in a statement: “For years, Insys engaged in prolonged, illegal conduct that prioritized its profits over the health of the thousands of patients who relied on it. Today, the company is being held responsible for that and for its role in fueling the opioid epidemic.”

Stat, the online medical and health news site, quoted a statement from attorneys representing the local and state governments that sued Insys and other opioid makers of improperly marketing their medicines and downplaying their risks, saying:

“[W]e will actively pursue full financial disclosure for Insys and any other defendant that files for bankruptcy. Bankruptcy and restructuring does not necessarily mean that a company is insolvent. The goal of the litigation is not to bankrupt these opioid companies, but to abate the current opioid epidemic and seek long-term, sustainable solutions. If any defendant files for bankruptcy, we will work through all legal avenues to see that our clients’ end goal of abating the crisis is met.”

In my practice, I see not only the harms that patients suffer while seeking medical services, but also the wreckage that can be inflicted on them and their loved ones by dangerous drugs. Opioid abuse and drug overdoses — especially of fentanyl and illicit street narcotics for which prescription painkillers served as gateways — killed more than 70,000 Americans in 2018 alone, the federal Centers for Disease Control and Prevention reported. Overdoses have become a leading cause of death for Americans 55 and younger and people in this country are now more prone to die of opioid overdoses than in vehicle crashes.

The opioid crisis was years in the making, with plenty of fault to spread around for doctors, nurses, hospitals, insurers, and others. Big Pharma, of course, was a huge and especially bad player, investigations by media and now states, cities, and other parties to opioid lawsuits have found.

Insys may have racked up infamous firsts — media reports say its CEO is the first in the industry to face prison time for his part in unacceptable hype for opioids and the firm appears to be the first to declare bankruptcy due to its sales and marketing of powerful painkillers. But Purdue Pharmaceuticals — owned by the philanthropic Sackler family and notorious now for its Oxycontin drug — also has said publicly it may seek bankruptcy protection to deal with a barrage of lawsuits against it.

Lawyers working in an Ohio federal court, where hundreds of opioid-related lawsuits have been consolidated in the hands of a judge who has said he hopes to strike a “global resolution” of the complex, big-dollar claims, reported an advance in the negotiations, the New York Times reported. The proposal would affect Americans across the country, seeking to wrap in hundreds of municipalities and offer them some part of any prospective settlement. But that still leaves a huge thicket of litigants and much remains to be seen how this proposal will be received.

As opioid cases march through the court system, however, politicians, policymakers, regulators, doctors, hospitals, and Big Pharma still must step up to do far more to combat what has become one of the major public health crises confronting the country. It also will not be beaten by easy answers, including the vague hope that legalized marijuana might provide a medical pain-relieving option that would curb opioid abuse. This contention has been pushed by advocates in many states to liberalize laws on grass and it seemed to get early research support. But as the Los Angeles Times reported of a newly published study:

[A] team led by Chelsea Shover of Stanford University School of Medicine decided to update the analysis [about the potential marijuana benefit] using data through 2017. When they did, they found the reverse: Death rates involving prescription opioids were 23% higher than expected in states that passed medical marijuana laws. Legalizing medical marijuana ‘is not going to be a solution to the opioid overdose crisis,’ said Shover, a postdoctoral scholar in psychiatry and behavioral sciences. ‘It would be wonderful if that were true, but the evidence doesn’t suggest that it is.’

Yes, we’ve got a lot of hard work ahead to stop the opioid carnage.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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