Drugmaker Insys Therapeutics Inc filed for Chapter 11 bankruptcy protection on Monday, about a week after agreeing to pay $225 million to settle a USA probe into bribes it paid to doctors for prescribing a powerful opioid medication.
The company said throughout the court-supervised Chapter 11 bankruptcy process, it meant to utilise existing cash on hand and operating cash flows to support its continued operations, including payment of all employee wages and benefits without interruption and continuing programmes offered to customers.
The company would pay a $2m fine and $28m in forfeiture.
The company resolved its case with the US Justice Department for $225m (€198m), which saw a subsidiary of the company plead guilty to five counts of mail fraud.
Among those that were found guilty was the company's founder, John Kapoor. More than 7,000 deaths have reported for people who were prescribed Subsys, according to the U.S. Food and Drug Administration's Adverse Events Reporting System.
The powerful drug was only approved for consumption among patients with cancer who were already consuming large quantities of opioids.
Between 2012 and 2015, Insys allegedly paid doctors to prescribe its potent opioid medication and then lied to insurance companies to ensure that the expensive fentanyl-based painkiller would be covered.
INSYS was also charged in federal court in Boston with bribing doctors to encourage prescriptions of its fentanyl spray product.
Insys listed United States dollars 175.1 million and US$262.5 million in debt in a bankruptcy petition, with Kapoor owning 63.2% of the firm.
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 Justice Department's investigation into the company's practices has led to multiple charges against Insys employees.
In bankruptcy, the government will become one more of the company's creditors.
Apart from Insys, drugmakers such as Purdue Pharma are also being investigated. Many companies have been sued by states and Indian tribes.
The announcement that the company would file for bankruptcy arrives after the company had experienced year-on-year losses, which saw the company post a full-year EBITDA loss of $28.7m for 2018, following a $11.5m loss the previous year.
Chandler, Arizona-based Insys Therapeutics filed a voluntary bankruptcy petition on Tuesday and said it planned to sell all its assets and address its legal liabilities.