Updated: June 10, 2019 / 6:24 a.m.
On Monday, drug manufacturer Insys Therapeutics Inc filed for bankruptcy amid the mounting of expenses that was driven by a U.S. Justice Department probe into claims that the company bribed doctors with money to prescribe a powerful opioid medication to their patients.
The Chapter 11 bankruptcy filing was marked as a first for a drug manufacturer that is accused of helping fuel the deadly U.S. opioid epidemic which had came days after Insys struck a $225 million settlement with the Justice Department.
The department is now Insys’ largest unsecured creditor due to Wednesday’s agreement, which resulted in a subsidiary pleading guilty of fraud charges and the company entering into a deferred prosecution agreement.
The filing of bankruptcy followed after a federal jury in Boston in May found Insys founder John Kapoor and four other former executives guilty of engaging in a racketeering conspiracy that centered around a fentanyl spray known as Subsys.
Chandler, Arizona-based Insys stated that the company filed for bankruptcy in U.S. Bankruptcy Court in the District of Delaware to accelerate a sale of its assets, including the drug Subsys.
Insys listed a total of $175.1 million in assets and $262.5 million in debt as of March 31. Shares of Insys fell 66% to 44 cents in premarket trading.
It’s said that other opioid manufacturers are or will soon be facing similar lawsuits against them, including OxyContin maker Purdue Pharma, which is considering to file for bankruptcy amid the litigation.