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 The agreement was announced on Tuesday by a lawyer for Chandler,
Arizona-based Insys during a hearing before a federal bankruptcy
judge in Wilmington Delaware, who was set to consider whether to
block the states from moving forward with their cases.
Insys requested the injunction when it filed for Chapter 11
bankruptcy protection on June 10, becoming the first drugmaker
accused in lawsuits by state and local governments of contributing
to the deadly opioid epidemic to do so.
Insys filed for bankruptcy days after striking a $225 million
settlement with the Justice Department resolving claims it paid
doctors bribes to prescribe Subsys, the company's addictive fentanyl
spray.
A federal jury in Boston in May found Insys founder John Kapoor and
four other former executives guilty of engaging in a racketeering
conspiracy involving Subsys marketing practices.
Filing for bankruptcy normally halts active litigation against a
company while it reorganizes. But a longstanding exception in U.S.
bankruptcy law allows for lawsuits to proceed enforcing government
officials' "police powers."
Lawyers for Maryland and Minnesota, where Insys faced upcoming
administrative trials in August and September, last week opposed
Insys' motion to stay their cases, citing that exception. New York,
New Jersey and Arizona joined them.
A ruling on Insys' motion could have influenced whether OxyContin
maker Purdue Pharma LP - another opioid manufacturer facing some
2,000 lawsuits - decides to file for bankruptcy protection,
according to a person familiar with the matter and legal experts.
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But at Tuesday's hearing, Ronit Berkovich, a lawyer for Insys, told
U.S. Bankruptcy Judge Kevin Gross that the five states, as well as
North Carolina, had agreed to stay their cases in order to support a
settlement negotiation protocol.
After hearing arguments over the proposal's merits, Gross agreed to
approve it, saying it initiates negotiations that need to take place
to avoid draining cash-strapped Insys of money.
"We don't want to reduce that money by litigating and the like," he
said.
Cities and counties pursuing hundreds of similar cases against Insys
are not part of the deal, nor are several states that had already
agreed to put their lawsuits on hold.
But Berkovich said they would be invited to participate in the
negotiation process, which she said envisions putting Insys in a
position to file a restructuring plan for the court's approval by
Sept. 2.
(Reporting by Nate Raymond in Boston; Editing by Bill Berkrot)
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