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Trending News: Pharmaceutical Companies File for Bankruptcy

Posted on August 21, 2019 in

Over two years have passed since the United States government declared an epidemic of opioid abuse and overdose a national emergency. The situation has caught the attention of the media, politicians, physicians, scientists and US citizens who continue to debate potential solutions. According to National Public Radio (NPR), the nation’s opioid epidemic has killed more than 200,000 Americas and has now triggered hundreds of lawsuits against Big Pharma.

Among those companies affected are Massachusetts based Aegerion Pharmaceuticals, biopharmaceutical company Achaogen, Aceto Corp, a firm developing and selling health products, pharmaceutical ingredients and performance chemicals, New Jersey based Pernix Therapeutics Holdings, biopharmaceutical company Immune Pharmaceuticals, Imerys Talc America, which supplies talc for Johnson & Johnson’s baby powder, specialty drug maker Avadel Specialty Pharmaceuticals and Chicago based Novum Pharma.

On top of the contributing list is Insys Therapeutics, who marketed an opioid pain medication between 2012 and 2015 called Subsys. While the medication generated hundreds of millions of dollars in sales, the highly marketed prescription opioid turned out to also be highly addictive as it contained fentanyl, a drug 100 times more powerful than morphine. This past June, the firm pleaded guilty to felony charges that it bribed doctors to prescribe Subsys to patients and agreed to pay the federal government $225 million in fines. 

Five days later, the company filed for Chapter 11 bankruptcy, asking the court to allow it to sell its assets to pay the debts owed. This means further down the road the government may not collect all the settlement money it is due. The case marked the first time a drugmaker sought bankruptcy protection due to legal action related to the opioid crisis. 

Under Chapter 11 protection, the company will be able to keep operating as normal, as they devise a plan to pay the accumulating legal expenses. Insys CEO Andrew Long said in a statement that the bankruptcy proceedings would allow the company to negotiate with creditors. 

“The filing of the bankruptcy petition automatically stays any lawsuits pending against the debtor company and the plaintiffs’ claims become potential claims against the company’s bankruptcy estate,” states Bast Amron’s Zak Laux. “In a Chapter 11 case, the company will propose how and how much to pay or otherwise treat those claims and the plaintiffs—now creditors of the bankruptcy estate—will have the opportunity to vote to accept or reject that proposed treatment.”

Another major state opioid trial now underway in Oklahoma is against Johnson & Johnson, with a second lawsuit set to begin in October in Ohio. The judge in the case, Judge Dan Polster, has requested the parties reach a comprehensive settlement prior to the trial as to not disrupt the pharmaceutical industry completely. 

Bast Amron’s Dana Quick believes these cases are only the beginning. “While Insys is suffering under the burden of government fines, a bigger blow to the industry is still on the horizon as hundreds of lawsuits have been and are being filed over the highly addictive nature of opioids. The widespread effect of the opioid crisis across the country will likely make opioids the new tobacco or asbestos case in terms of dollars at issue and individuals injured. We can expect that this may translate into more pharmaceutical bankruptcy filings in the years to come.”

In all, more than 1,800 state and local governments have filed opioid-related lawsuits, now combinedly known as the National Prescription Opiate Litigation. These cases and settlements could run into billions of dollars as the government holds drug companies accountable for fueling the opioid epidemic and many plummet into bankruptcy.

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