More Bankruptcy Filings: Drug Makers Considering Chapter 11 As They Face Increased Liability In Opioid Epidemic

With drug maker Insys Therapeutics (INSY) filing for Chapter 11 bankruptcy amid corruption charges on Monday, it may not be the only pharmaceutical company that is considering the move. As the opioid epidemic heats up and gains more attention, more drug companies may succumb to bankruptcy in the near future, according to a report by NPR.

More than 200,000 Americans have died from opioid overdoses, causing hundreds of lawsuits filed against the manufacturers of these addictive drugs, the news outlet reported. In Insys Therapeutics’ case, it was the opioid Subsys that caused the company to fall, seeing plummeting stock prices after it provided kickbacks to physicians that prescribed the drug to patients that didn’t necessarily need them.

As more drug makers find themselves embroiled in even more opioid lawsuits, the need to file for bankruptcy may present itself with pharmaceutical companies that are facing stiff liabilities in the opioid crisis. Purdue Pharma, the maker of OxyContin, is already considering the option as more than 1,800 state and local opioid lawsuits have been filed against the drug companies that produce addictive painkillers, which could reach tens of billions of dollars ins settlements and fines, NPR said.

Insys agreed to pay the federal government $225 million in penalties, but the company still faces more opioid-related lawsuits, which CEO Andrew Long said in a statement to NPR, contributed to the firm’s decision to file for bankruptcy.

Johnson & Johnson (JNJ) has also found itself involved in litigation with a case currently pending in Oklahoma and a second lawsuit slated to begin in October in Ohio. The judge in the case has requested that the parties in the suit reach a settlement as to not disrupt the pharmaceutical industry but still providing the communities some reprieve, NPR reported. Negotiations by Johnson & Johnson and the states are underway, but a deal has not been reached, the news outlet said.

Shares of Insys stock were down 37.11 percent as of 11:13 a.m. ET on Tuesday while shares of Johnson & Johnson were up 0.63 percent at the same time.