The Shadow
A drug manufacturer named as a defendant in a class-action lawsuit involving Alleghany County and the city of Covington has filed for bankruptcy as inquests into its business practices have heightened nationwide.
Drugmaker Insys Therapeutics, Inc. filed for Chapter 11 bankruptcy protection on Monday, about a week after agreeing to pay $225 million to settle a U.S. probe into bribes it paid to doctors for prescribing a powerful opioid medication.
The filing in U.S. Bankruptcy Court in the District of Delaware made Insys the first drug manufacturer to turn to bankruptcy due to legal expenses brought on by accusations of responsibility in the deadly U.S. opioid epidemic.
Shares of the company stock fell nearly 60 percent to 52 cents in premarket trading.
Insys said it intends to continue operating its business, while it pursues the sale of substantially all its assets under a court-supervised sale process.
Chandler, Arizona-based Insys, which manufactured the fentanyl spray Subsys, agreed on June 5 to settle the U.S. Justice Department probe and have a subsidiary plead guilty to fraud charges.
Subsys is an under-the-tongue spray the U.S. Food and Drug Administration approved in 2012 only for treating pain in cancer patients. Its main ingredient, fentanyl, is an opioid 100 times stronger than morphine.
Alleghany County and Covington are among almost 50 localities in Virginia who have joined a class-action suit against several drug manufacturers, including Insys.
Insys Therapeutics’ bankruptcy filing does not affect its status as a defendant in that suit, as its Chapter 11 filing occurred after Virginia’s localities filed their claims.
