According to the announcement of the settlement Wednesday, the U.S. Attorney's Office for the District of MA also filed charges against Insys and a subsidiary with five counts of mail fraud. Company employees enlisted physicians to prescribe the medication, which is 100 times stronger than morphine, in high doses and often to people who did not need it.
The department is now Insys' largest unsecured creditor due to Wednesday's accord, which resulted in a subsidiary pleading guilty to fraud charges and the company entering into a deferred prosecution agreement.
Opioid maker Insys Therapeutics has agreed to pay $225 million to settle allegations that it paid kickbacks to doctors and nurse practitiioners to induce them to prescribe its flagship fentanyl painkiller.
The company's former executive chairman Kapoor was convicted by a federal jury in Boston in connection with bribing doctors to prescribe the powerful opioid Subsys, a highly-addictive sublingual fentanyl spray intended for cancer patients experiencing breakthrough pain, unnecessarily and at higher-than-recommended dosages. The spray is mainly used to alleviate pain in cancer patients.
The company would pay a $2m fine and $28m in forfeiture.
Prosecutors said the scheme helped boost sales of Subsys, whose net revenue grew from $8.6 million in 2012 to $329 million in 2015.
The Chapter 11 bankruptcy filing marked a first for a drugmaker accused in lawsuits of helping fuel the deadly US opioid endemic and came just days after Insys struck a $225 million settlement with the Justice Department.
The investigation took a toll on Insys and sales of Subsys declined. On May 10, investors were warned that its legal costs may even force Insys to file for bankruptcy.
None the less, if the bankruptcy filing was granted, the pharmaceutical would be able to avert a stockpile of lawsuits filed against it claiming that the pharmaceutical had actively participated in an opioid epidemic in United States. Meanwhile, the company used bribes and kickbacks, including paying sham speaker fees, to get doctors to become prolific prescribers of the unsafe drug.
Most US states have sued Purdue Pharma LP, the maker of OxyContin, and several have sued members of its controlling Sackler family.
According to the bankruptcy filing, Insys had $175.1 million in assets and about $262.5 million in debts as of March 31st, while shares of Insys fell more than 66 percent to $0.44 following the reveal of its bankruptcy filing.