Insys is in fire sale mode after it agreed to divest all of its products in a 90-day restructuring deal reached in June. Now, the drugmaker has a buyer for the now-notorious opioid that played a major role in its demise—and that buyer has promised not to repeat Insys' marketing misdeeds.
A Delaware bankruptcy judge cleared the sale of the highly addictive, under-the-tongue fentanyl spray Subsys to Wyoming-based BTcP Pharma LLC, part of the MMB Healthcare network. The deal could net Insys $20 million in royalties.
Subsys was at the center of a $225 million federal settlement Insys signed in June to close charges the drugmaker paid physicians to boost prescriptions of the spray. Jettisoning the med from its books would mark the end of an ignominious period after the fallout from a marketing scandal reached all the way to the company’s founder.
According to Reuters, six state attorneys general opposed the sale of Subsys for fear that the new buyer would market the spray in much the same way Insys had. The states eventually withdrew their opposition after BTcP owner Michael Burke pledged that the drug's marketing would restrict its prescription for cancer patients alone.
An Insys spokesman declined to comment on the Subsys transaction.
As part of its DOJ settlement, Insys agreed to restructure and divest its products within 90 days of filing Chapter 11 bankruptcy, and the Subsys selloff follows Insys’ $12 million offloading last month of a set of other assets. Hikma Pharmaceuticals snapped up unit-dose nasal and sublingual spray manufacturing equipment as well as pipeline products of epinephrine and naloxone nasal sprays. Naloxone spray is used to counteract opioid overdoses.
According to bankruptcy records, Hikma made a $1 million down payment and agreed to pay the remaining $11.2 million on closing. The London-based company, which does some contract work, did not say where it intends to develop and produce its new assets.
As part of its settlement, Insys also agreed to five years of deferred prosecution on civil and criminal charges.
Prosecutors have cracked down on executives themselves, too. In May, founder and former CEO John Kapoor was found guilty on federal racketeering charges by a Boston jury after driving a scheme to reward sales managers for wining and dining physicians to boost Subsys sales. Federal prosecutors said that scheme helped exacerbate the nation’s opioid epidemic.
Insys’ executive-driven bribery scheme included allegations that doctors were treated to expensive seafood dinners and strip club visits as part of a sham speaker program directed by the company’s marketing team. The former head of that program, sales vice president Alec Burlakoff, reached a plea agreement on fraud charges in federal court and is currently working with the Arizona attorney general’s office in their ongoing investigation of Kapoor.
Burlakoff and Kapoor were just two of the company’s team members knocked by federal prosecutors. Another former CEO, Mark Babich, pleaded guilty to mail fraud charges and testified against Kapoor in his trial. The federal probe also nabbed former Insys sales managers involved in the scheme and five Manhattan doctors who were also implicated.