BOSTON, Oct 26 (Reuters) - A cracked vial here, a missing
label there. The complaints coming into New England Compounding
Center, the firm at the heart of the deadly U.S. meningitis
outbreak, were piling up.
In March, regulators responded to a complaint from the
prestigious Massachusetts Eye and Ear Infirmary about a potency
concern involving one of the eye medications it purchased from
NECC. The investigation is ongoing.
Over the summer, physicians at Ruby Memorial Hospital in
West Virginia returned a bag of cardioplegia solution used in
heart surgery after a patient did not respond as expected.
Testing showed the drug was not responsible, according to
the hospital's pharmacy director, but the episode made at least
one NECC sales representative uneasy.
"I remember thinking, are we just selling too much?" he
said. "Were we growing sales faster than our lab could handle?"
It is a question federal and state regulators are now
examining. More than 300 people who received a tainted steroid
sold by NECC that was used to treat back pain have been infected
with fungal meningitis and 25 have died.
Interviews with former NECC employees and its customers, and
a review of internal documents and newly-released state records,
paint a picture of a company whose rapid growth was marred
almost since its inception by breaches of regulations governing
compounding practices. They also show how regulators failed to
punish the company despite repeated violations of the rules.
As far back as 1999, barely a year after NECC was formed,
the Massachusetts Board of Registration in Pharmacy responded to
a complaint from a pharmacist alleging that Barry J. Cadden,
chief pharmacist and co-owner of NECC, had improperly provided a
healthcare provider with prescription blanks. The Board voted to
issue an informal, non-disciplinary reprimand.
In 2004 the Board voted again to issue an informal reprimand
after it received complaints from pharmacists in Iowa,
Wisconsin, Texas and South Dakota alleging that Cadden and NECC
were improperly soliciting out-of-state business, in some cases
using prescription ordering forms that had not been approved by
the Board.
And in 2006, the company reached a settlement with the Board
sparing it from a public reprimand and other measures despite
evidence that the company had again violated rules governing the
proper use of prescriptions, according to public documents.
Telephone and email requests to speak with nine individuals
involved in the events leading up to that settlement, including
Board members and inspectors, were not returned.
The U.S. Food and Drug Administration, which had warned NECC
of violations in 2006, declined to comment on the specifics of
the case due to an ongoing investigation. However, it has said a
lack of clear federal authority over compounding pharmacies has
inhibited its ability to take aggressive action.
NECC said it "worked cooperatively" with the Massachusetts
Board to resolve issues brought to the company's attention.
A FAMILY AFFAIR
NECC was formed in 1998 by Cadden and his in-laws, the
Conigliaro family, with a $5,000 investment, state records show.
Carla Conigliaro, the wife of Douglas Conigliaro, held the
biggest stake with 650 shares. Douglas's brother Gregory
Conigliaro, an entrepreneur who had built a successful waste
management company, held 100 shares. Their sister Lisa
Conigliaro and her husband Barry Cadden, both pharmacists, held
125 shares each.
None of the family members agreed to be interviewed.
Barry Cadden and his wife established themselves in a
two-story brick building in Framingham, Massachusetts, next to
Gregory's recycling business.
Former employees describe Cadden as gregarious and friendly,
with a passion for compounding. One compound might be a
medication without a certain preservative, or a pill for a
patient with an allergy to the coating on the version available
from the manufacturer. Or a soluble version of a pill.
"When I first started at NECC in 2004, the pharmacy
consisted of maybe two or three other pharmacists, Barry and his
wife, several technicians and data entry clerks, and a handful
of sales staff," said one former NECC pharmacist who left the
company in 2007.
The pharmacist describes an early culture typical of many
small businesses.
"The staff was always happy and upbeat," she said. "The
pharmacists were a funny bunch of down-to-earth characters. We
were frequently treated to cook-outs and catered meals and
always celebrated each others' birthdays."
Barry Cadden was extremely attentive to safety, she said.
"In addition to our regular quality control meetings and reviews
on Standard Operating Procedures, the techs would flag a
prescription by using special colored bins as being that of a
pediatric patient so that it was given extra care and priority,"
she said.
It was not long before Cadden sought to expand into other
states. He found a receptive audience among pain clinics that
enjoyed the cost savings NECC offered - in one case, the company
told a client it could save $4,500 a year if it purchased a
particular steroid through NECC. It also sold to hospitals who
were turning to compounders to fill the gaps caused by worsening
shortages of prescription drugs from traditional manufacturers.
Nearly 1,200 drug shortages, from chemotherapies to
painkillers, were reported between 2001 and mid-2011, with some
of the biggest increases seen in the latter half of that decade,
according to the Government Accountability Office. Many of the
supply disruptions stemmed from manufacturers' quality control
problems and the waning profitability of certain medicines.
NECC thrived on the demand. By the time the company
surrendered its license on Oct. 3, NECC was supplying hundreds
of hospitals across the country, according to a list of
customers released by the FDA.
"We usually turned to the compounding center when the drugs
we needed for our patients were unavailable from the suppliers
we typically use," said Eric Swensen, a spokesman for the
University of Virginia Health System, which purchased three
drugs from NECC (but not the steroid behind the meningitis
outbreak).
As the pharmacy came under increasing pressure to meet
demand, additional lab staff were hired, the former NECC sales
representative said. Even so, he added, NECC sales staff were
routinely pulled into production to speed the process.
"We were down there for two hours at a time putting labels
on syringes in the shipping area," he said. "We were doing most
things by hand."
As shortages increased of ondansetron, a drug to treat
nausea in cancer patients, NECC could not make the drug fast
enough to meet demand, the sales representative said. Barry
Cadden decided to provide the drug only to children, and
priority was given to existing customers of NECC.
PRESCRIPTION PAD IRREGULARITIES
In Massachusetts, compounding pharmacies are not allowed to
make unsolicited offers to physicians for products that are
unavailable from a manufacturer or for which the pharmacy has
not received a patient-specific prescription from a healthcare
provider. Yet NECC promoted any number of products to physicians
across the country, according to marketing materials reviewed by
Reuters.
Complaints about irregularities in NECC's prescription
ordering process have emerged periodically for more than a
decade.
On Oct. 27, 2004, Massachusetts health investigators
demanded that NECC respond to allegations, stemming from a site
inspection on Sept. 23, 2004, that the company had possibly
violated a Massachusetts regulation stating that compounded
drugs may not be supplied to a practitioner for general
dispensing without a patient-specific prescription.
"A review of the same documentation provided to you does
show what would appear to be incorrect or repetitive names being
provided by several of our prescribing physicians," the company
said in response.
In a 2006 warning letter to NECC, the FDA wrote: "Although
your firm advises physicians that a prescription for an
individually identified patient is necessary to receive
compounded drugs, your firm has reportedly also told physicians'
offices that using a staff member's name on the prescription
would suffice."
Despite the warning letter, NECC continued to seek ways to
work around the patient-specific prescription requirement. It
might ask, for example, for a patient schedule.
"If you are ordering 75 units we will need a representation
of patients that you plan to use the medication on," one NECC
sales manager wrote in an email in June this year to NewSouth
NeuroSpine, a neurosurgery and pain management clinic in
Mississippi. "If one day's schedule has close to 75 patients
that will be acceptable to fulfill the order. If it is easier
for you to provide a simple list of names that would be OK too."
Frank York, NewSouth NeuroSpine's chief executive, said its
physicians did not write individual prescriptions or turn over
patient names, for what he said were patient privacy reasons.
Yet the center received product anyway. It is not illegal for
healthcare providers to buy in bulk from licensed pharmacies, of
which NECC was one.
NECC also allowed customers to stockpile medication, and to
keep patient prescriptions on the hospital's premises, rather
than provide them to the pharmacy, contrary to Massachusetts
regulations.
"Requests for compounded medications forwarded to NECC will
be based upon the (hospital's) receipt of prescriptions for
individual patients or for 'office stock' in anticipation of
receipt of prescriptions for the requested compounded
medications," read one standard agreement offered in 2010 to
hospital customers affiliated with the Child Health Corporation
of America, a hospital group purchasing organization that is now
part of the Children's Hospital Association,
A spokeswoman for the Children's Hospital Association did
not respond to repeated requests for comment.
REGULATORY INSPECTIONS
It is unclear why Massachusetts regulators, who have primary
responsibility for regulating pharmacies in the state, failed to
notice that NECC appeared to be operating outside the scope of
its license. Public health officials say they are investigating
the matter.
Paul Cirel, an attorney for NECC, said recently in response
to criticism, that Massachusetts regulators "had numerous
opportunities, including as recently as last summer, to make
first-hand observations of the NECC's facilities and
operations."
"It is hard to imagine that the Board has not been fully
apprised of both the manner and scale of the company's
operations," he said.
Public documents appear to support Cirel, at least to a
degree.
In a March 2003 letter to health investigators, Cirel noted
that "NECC compounds some prescription medication in advance of
the receipt of valid prescription orders from authorized
prescribers. These compounds are made in lots, in limited
quantities in anticipation of NECC's receipt of patient-specific
prescription orders."
Cumulative violations by NECC from 1999 to 2003, including
complaints investigated by the FDA of two adverse patient
reactions to drugs compounded by NECC - one of which,
methylprednisolone acetate, is the same steroid associated with
the current meningitis outbreak - prompted the Board in 2004 to
recommend a formal reprimand.
NECC's lawyer argued that a public reprimand of the kind the
Board was seeking could trigger investigations in more than 40
other states where NECC was licensed and would be "potentially
fatal to the business."
When the matter was resolved in 2006, NECC escaped the
public reprimand. The Board reduced the proposed probation to
one year, and stayed it. Moreover, the board of pharmacy and the
FDA agreed not to report the settlement to the National
Association of State Boards of Pharmacy or other outside
agencies, records show.
Massachusetts regulators say they find that agreement,
signed under a previous administration, "troubling."
In a statement, the Massachusetts Department of Public
Health said it is "actively looking into the decisions made by
the Board more than six years ago."
"All options are on the table, and no actions have been
ruled out," the statement said. "We have moved to permanently
revoke the license of NECC and its owners and a criminal
investigation is under way. We won't be satisfied until all of
those responsible for these troubling events are held
accountable."
In May 2011 NECC was inspected in connection with a proposed
expansion of its facility. The inspection report noted that all
requirements related to prescription processing were in order,
and that "patient profiles are maintained."
It said the pharmacy met sanitation standards, and that
technicians "operate within the scope of the law and
regulations."
This week, Dr. Madeleine Biondolillo, a top Massachusetts
public health official, told journalists that the latest
inspection of NECC, after the meningitis outbreak in September,
showed that NECC repeatedly failed to follow standard safety and
quality procedures, including waiting for results of sterility
tests on its injectable steroid before shipping them to doctors.
She did not respond to an emailed question asking how NECC's
standards might have fallen so precipitously.
The FDA said on Friday it had found "greenish black foreign
matter" in 83 of the 321 vials of steroid linked to the
meningitis outbreak. It also said an early October inspection
had found bacteria and mold within two "clean rooms" used for
production of sterile drug products at NECC.
BIRTH OF AMERIDOSE
In 2004, new regulations led to yet more demand for NECC's
compounding services. The U.S. Pharmacopeial Convention (USP), a
non-profit scientific group which sets quality standards for
drugs, food ingredients, and dietary supplements, issued
stricter rules for all entities producing sterile preparations.
For instance, it required that air be filtered; that
technicians wear masks, certain kinds of gloves, and shirts or
jackets with long sleeves rather than short; and that they clean
gloves with isopropol alcohol.
"A lot of hospitals said these changes really improve
patient safety, so we'll budget for them," said Rick Schnatz, a
senior scientist at USP. "But others said there are commercial
entities already set up to do that. Over the next few years that
movement got stronger, with hospitals turning to outside
pharmacies that could do their sterile compounding."
The scale of the potential new business was more than NECC
could manage. It was not registered with the FDA as a
manufacturer and did not have the equipment that could make
products at the speed or scale hospitals require.
In 2006 the Conigliaros formed Ameridose LLC to mix drugs
and repackage them in a sterile environment on a much larger
scale than was possible for NECC. Gregory Conigliaro and Barry
Cadden were listed as company managers in the company's
application. The Congiliaros and Cadden were listed as owners.
"Ameridose was a licensed manufacturing facility and was
regulated by the FDA," said the former NECC pharmacist. "When my
daughter was born, I was in the hospital on Oxytocin to induce
labor, looked up and saw the IV solution was from Ameridose."
Between them, Ameridose and NECC offered everything from
compounds mixed from powders to mixed solutions and products
repackaged into tailored doses. At trade shows, the two
companies would often share a booth, with a single banner
listing both company names on the wall behind, the former sales
representative said.
MEDICAL SALES MANAGEMENT
The sales arm for both NECC and Ameridose was a company
called Medical Sales Management, also owned by the Conigliaros
and housed in the same building as NECC.
Douglas Conigliaro is listed as the company's president and
Gregory Conigliaro and the Caddens are listed as directors,
according to Massachusetts corporate filings.
Sales representatives were employed by MSM but represented
either NECC or Ameridose, the former NECC sales representative
explained. By the time of the meningitis outbreak, they each had
more than 20 representatives.
Douglas Conigliaro played a particularly important role at
Ameridose, which has been temporarily closed.
"Doug was a top dog in the sales operation," said the former
sales representative. "At Ameridose, his name is pedigree. He
called the hospitals, he attended trade shows, he knew how to
talk to doctors."
Douglas Conigliaro, who declined to be interviewed, is a
physician who had earned his medical degree from Boston
University School of Medicine and trained at Massachusetts
General Hospital, according to records posted on the website of
the Florida Department of Health.
In 2002, Florida's health department fined Conigliaro
$10,000 and ordered him to take continuing medical education in
a case involving a woman named Eleanor Karstetter. She was
paralyzed from the waist down during a 1995 operation performed
by Conigliaro to implant a pain pump to relieve back pain, and
died two years later.
Conigliaro came to a $1 million settlement with the
Karstetter family. He remains licensed to practice as an
anesthesiologist and pain specialist in Florida.
NECC has stopped operating and faces an array of federal and
state investigations, not to mention the prospect of civil suits
for liability. Its owners could face criminal charges.
The future is also uncertain for Ameridose, even if
regulators allow it to reopen.
The FDA is also under pressure, with some members of
Congress calling for greater regulation of compounding
pharmacies.
Amid the handwringing from regulators and politicians,
those who worked for and represented NECC are clear about one
thing: "Everybody knew what we were doing," the former sales
representative said. "At the end of the day, we took care of
problems for hospitals at a fair price."
