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The Pulse of the Pharmaceutical Industry

States Pause Lawsuits Against Insys During Bankruptcy Proceedings

Written by: | | Dated: Wednesday, July 3rd, 2019



Less than a month after filing for bankruptcy, embattled opioid drugmaker Insys Therapeutics saw a few bright spots this week, including a reprieve from some of the lawsuits against it, as well as a path forward for regulatory approval of an opioid overdose treatment.

Last month, Insys filed for bankruptcy after agreeing to pay about $225 million in fines to the federal government over fraudulent marketing schemes that were used to boost sales of the powerful opioid Subsys. That bankruptcy filing followed a guilty verdict in a trial of former Insys executives, including founder John Kapoor of orchestrating those schemes to boost prescriptions. While that lawsuit is over, there are several still pending in state courts against the company. However, on Tuesday, CNBC reported that five states who have lawsuits against the company agreed to facilitate settlement talks following the company’s filing for bankruptcy. The state lawsuits charge the company with helping to fuel the opioid crisis that has swept across the nation.

The agreement between the five states, New York, New Jersey, Arizona, Maryland and Minnesota, and Insys was announced during a bankruptcy hearing this week, CNBC said. The judge in that hearing was set to determine whether or not the states could move forward with their cases during the bankruptcy proceedings. When companies file for bankruptcy, the action typically halts any litigation aimed that the company while it undergoes a restructuring. However, as CNBC noted, there are some cases when lawsuits against a company in Chapter 11 can proceed, including lawsuits that enforce the government’s “police powers.”

Insys attorney Ronit Berkovich said during the proceedings that the five states, as well as North Carolina, “agreed to stay their cases in order to support a settlement negotiation protocol,” CNBC reported. The judge agreed to the request in order to avoid the company being completely drained of cash, the report said. Despite that agreement between those states and Insys, there are still numerous other lawsuits against the company from other states, as well as municipal and county governments.

The company predicted it might run out of cash several months ago. Only weeks ago, Insys noted in its quarterly report that it had available cash of $87.6 million, which was well below what the company owed from the Subsys litigation, the $225 million it agreed to pay last week, as well as a $150 million agreement with the U.S. Department of Justice the company struck last fall. Insys is aiming for Sept. 2 to file a restructuring plan for court approval.

In the meantime, the company also announced Tuesday that the U.S. Food and Drug Administration accepted its New Drug Application for the company’s investigational, proprietary naloxone nasal spray for the emergency treatment of known or suspected opioid overdose in both adult and pediatric patients. Insys’ naloxone nasal spray is a single unit dose spray device that delivers 8mg naloxone dose.

Venkat Goskonda, chief scientific officer at Insys Therapeutics, said the acceptance of the NDA is an important milestone in battling the opioid epidemic.

“We believe our formulation has the potential to be a critical tool in combatting opioid overdose cases. The rapid absorption and significant exposure of the formulation may be useful in opioid overdose, particularly with the rise of synthetic opioid use,” Goskonda said in a statement.



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