Drug company Insys files for bankruptcy

Drug company Insys Therapeutics filed for Chapter 11 bankruptcy Monday, days after its subsidiary pleaded guilty to fraud charges in an opioid bribery scheme and the drugmaker agreed to pay $225 million to the government.

The Chandler, Ariz.,-based company said in a release it will continue to operate its business while it pursues transactions through a court-supervised sales process.

Insys CEO Andrew Long said in the release the move is the best course of action to “address our legacy legal challenges in a fair and transparent manner.”

On Friday, Insys’ operating unit pleaded guilty in a scheme to pay bribes and kickbacks to doctors in exchange for increased prescriptions of a highly addictive fentanyl spray known as Subsys. The company last week agreed to pay $30 million for five counts of mail fraud and $195 million in a civil resolution, for a total of $225 million owed to the government.

Last month, founder John Kapoor, listed in the bankruptcy filing as owning 63.2% of the equity interests of Insys Therapeutics Inc., was convicted in a racketeering conspiracy along with four other former employees in the bribery scheme.

According to the conviction, Kapoor and the others paid bribes to doctors prescribing Subsys in the form of fees for sham speaking events billed as educational opportunities.

The filing reveals that the company owes nearly $14 million to counsel for Kapoor, and additional $2 million for counsel to other Insys employees.

Last month, the company said in its first quarter filing it had just $87 million in cash and investments, and liabilities of approximately $240 million at the end of March.