NEW YORK/BOSTON: The fate of thousands of lawsuits seeking to hold drugmakers responsible for fueling the U.S. opioid epidemic hinges in part on a thorny legal question: Can a company can use a bankruptcy to stop lawsuits from cities and states?
State and local officials are suing Insys and other drugmakers in an attempt to address harm from an opioid crisis that has killed nearly 400,000 people between 1999 and 2017. More than half these deaths resulted from prescription painkillers, according to the U.S. Centers for Disease Control and Prevention.
Insys already had reached a US$225 million settlement before filing for bankruptcy with the U.S. Justice Department, admitting to illegal conduct in resolving claims that it bribed doctors to write prescriptions, including medically unnecessary ones, for a fentanyl spray called Subsys designed to treat cancer pain.
Allowing the cases to continue would leave less money for creditors, including the very government officials seeking to hold it to account, Insys contends, adding that its request is not an attempt to escape liability. A ruling allowing the Insys litigation to proceed could discourage Purdue from seeking bankruptcy protection, while pausing the cases might signal that Chapter 11 bankruptcy proceedings are a viable way to halt lawsuits and take advantage of breathing room to reach a broader settlement with plaintiffs, according to the person familiar with the matter and several legal experts.