Thou hast committed fornication . . .
But that was in another country and, besides, the wench is dead.
— Christopher Marlowe, The Jew of Malta
Insys Therapeutics is the company that gave America Subsys, a powerful, quick-acting Fentanyl product. Insys’s management team was convicted of RICO activities arising out of its abhorrent marketing practices and awaits sentencing. Insys itself copped a plea to criminal and civil fraud, agreeing to pay a civil penalty of $225 million. There are still something like a thousand other civil cases pending against Insys, brought by various state, county and local governments.
This week, as WC predicted, Insys filed Chapter 11, seeking to reorganize itself — stiff its creditors — in bankruptcy.
WC has briefly reviewed Insys’s bankruptcy pleadings and is struggling to manage his fury at the lies, half-truths and distortions.
Some background: Insys’s primary product, Subsys, was developed and approved as a last resort treatment for unmanageable pain in cancer patients. At the risk of sounding cold, the idea was that the cancer patients would die of their disease before they could become addicted to Subsys. But Insys, in the name of profit and greed, engaged in a long pattern of deliberate, disgusting deception to persuade physicians to prescribe use of Subsys for “off-label” uses, including long-term treatment of chronic pain.
There is scant evidence that opiates in general, and Fentanyl in particular, are effective in the treatment of chronic pain. The human body pretty quickly develops tolerance to opiates, requiring increasingly higher doses. But there is overwhelming evidence that the use of opiates like Fentanyl leads to addiction and the host of consequences to opiate addiction. Including death from Fentanyl overdoses. But to Insys, that critical drawback was a marketing tool. After all, patients addicted to Subsys would be repeat customers. Like addiction to to tobacco, but a quicker kill, as it were. More sales. more profits. Mind you, Insys’s executives have been convicted of being just that cynical. Insys the corporation has copped a plea to just that conduct.
And this criminal enterprise, this horrifically cynical company, has now filed bankruptcy, seeking protection from its creditors. Most likely, it will be a liquidation Chapter 11, a more expensive form of Chapter 7 liquidation, where the debtor and creditors bet they’ll not more in a company-supervised sale of assets than in a sale of assets conducted by a bankruptcy trustee. Chapter 11 is very, very expensive.
In the early stages of its Chapter 11 case, Insys has made two assertions to justify stopping — enjoining — all those pending court cases against it.
First, it argues, Subsys was just a tiny fraction of the opiate tidal wave in America. In effect, Insys is arguing that it didn’t create as many junkies and fatal overdoses as the other guys. That might be the lamest attempt at a defense WC has heard in 45 years of lawyering. “We tried to create even more addicts, but we didn’t succeed.” A bankruptcy judge, even a District of Delaware bankruptcy judge, should not be impressed with that argument. Insys lied, cheated, deceived and defrauded patients, doctors and insurers, but it didn’t work so well, so, Insys argues, they shouldn’t be judged harshly.1 Excuse me? Can you imagine a bank robber’s defense, “Yeah, I robbed a bank and killed a bunch of people, but it was a little bank and I didn’t get very much money so I should get a shorter sentence”? That’s what Insys is arguing. And it’s bullshit.
The second defense Insys makes is that all of that bad stuff happened under the old, bad management, and the new, “good” management won’t do any of that bad stuff, and should be given a chance. This “defense” is, if anything, even more infuriating than the first. The corporation – Insys – stands convicted of appalling, despicable conduct. If an individual engaged in the kind of shocking misconduct that Insys did, he or she would be in jail for life. Insys’s argument is the equivalent of the murderer who, at sentencing, claims to have found God and to be a new man. “But wait, I’ve changed.” We can’t jail corporations, more’s the pity. But we can deny them the lame defenses of a convicted perp. This “defense” is bullshit, too.
And what the new and improved Insys hasn’t done yet is admit that the only way it can pay its creditors — including that $225 million civil penalty — is to sell lots and lots of Subsys. Insys only has two FDA-approved products, and the other is not going to save the day.2 Sure, it has other products in development,3 but none of them are going to make the “new and improved” Insys gush money. Nor is it clear how the cash-starved Insys can afford to continue expensive FDA-mandated trials.
Bankruptcy is a pretty cynical process, but it shouldn’t be that cynical. If WC were the bankruptcy judge, Insys would be given a choice: dismiss the Chapter 11 case or face conversion to liquidation under Chapter 7. Some business crimes are so essentially evil that they should disqualify the business from the protection of bankruptcy. Insys is Exhibit A.
- “Only” $300 million a year in revenue. ↩
- A cannabinoid medication, for treatment of AIDS-induced nausea and cancer chemotherapy-induced nausea. Hardly the only product of its kind on the market. ↩
- Including a Naloxone nasal spray. That’s right, an opioid overdose treatment. From the manufacturer of a Fentanyl product. Gonna get ’em coming and going. Really, how cynical can you be? ↩