March 28, 2017

The Ultimate Cautionary Tale

The tragic and painful drama of The New England Compounding Center (NECC) came to a dramatic point last week with the conclusion of the criminal trial of its co-founder and chief executive officer. This was the latest chapter in a scandal that has, unfortunately, thrown a negative light on all compounding pharmacies. As the Boston Globe observed, the trial and the scandal “opened a window onto the little-known compounding industry.”

In 2012, fungal meningitis and other infections in twenty states were traced by the CDC to contaminated steroids, used principally to treat back pain, that were produced by NECC. This national outbreak was caused by fungal contamination of three batches of preservation-free methylprednisolone acetate (MPA). Vials of the steroid were shipped to pain management clinics, primarily in Tennessee, Indiana, and Michigan. The fungus-contaminated drugs killed 64 people in nine states. In addition to the 64 deaths, 753 people became seriously ill.

Criminal charges were initially brought against fourteen employees of NECC in a 131-count indictment. Two defendants, the majority owner of NECC, and her husband, pled guilty to transferring assets after the meningitis outbreak. They were sentenced to probation and fined. NECC’s sales director pled guilty to conspiring to defraud the FDA. Charges against two pharmacists were dismissed on a ruling that they could not be held criminally liable since they did not dispense the drugs. Similar charges were dismissed against another pharmacist, who continues to face a fraud charge.

After a nine-week trial, the jury deliberated for 20 hours over five days, and, last Wednesday, found Barry J. Cadden, the former president of NECC not guilty of 25 second degree murder charges that carried a potential life sentence, but he was found guilty on 57 of 96 other counts of fraud, conspiracy, mail fraud, racketeering, and other charges. The racketeering charges and 52 counts of fraud each carry up to 20 years in prison. Cadden will be sentenced on June 21, and he clearly faces a substantial prison term under the federal guidelines. (Once imposed, federal sentences cannot be reduced by more than ten percent. There is no longer any possibility of parole.) Of particular interest to compounders, Cadden was acquitted of charges that he sought to defraud the FDA by claiming that his center was a pharmacy, not a pharmaceutical manufacturer, but he was found guilty of the federal crime of introducing misbranded drugs into interstate commerce with intent to defraud and mislead.

At trial, the United States Attorney in Boston argued that Mr. Cadden ran NECC in an “extraordinarily dangerous” way by increasing production through disregard of sanitary conditions and that Cadden put “profits over patients.” The government established, at trial, that NECC used expired ingredients and falsified logs to make it appear that supposed “clean rooms” had been properly disinfected. After the outbreak, the FDA found multiple potential sources of contamination, including standing water, mold, air-borne bacteria, and contamination on workers’ gloves. In sales pitches to customers, Cadden claimed that NECC followed testing protocols and used state-of-the-art equipment, but he knew that neither was true. Throughout 2012, NECC failed to take remedial action, when its own environmental monitoring repeatedly detected mold and bacteria within the clean room suite.

Mr. Cadden also authorized the shipping of drugs before test results confirming sterility were returned, and never notified customers of non-sterile results. Certain batches of drugs were manufactured, in part, by an unlicensed pharmacy technician. Although acquitted of a related FDA fraud charge, Cadden was convicted of repeatedly attempting to shield NECC’s operations from oversight by claiming to be a traditional compounding pharmacy, which dispensed drugs pursuant to valid, patient-specific prescriptions. In fact, NECC routinely dispensed drugs, in bulk, without valid prescriptions, using fictional prescriptions to dispense drugs to “Michael Jackson,” “Freddie Mae,” “Diana Ross,” Donald Trump,” “Tom Brady,” “Bud Weiser,” and “Bill Clinton.”

Mr. Cadden’s defense attorney sought to blame the supervisory pharmacist who ran the clean rooms where the adulterated drugs were made. This pharmacist and six others have pled not guilty and are awaiting trial in Boston. Their trials were severed from Cadden’s trial by the trial judge.

Observers of the trial indicated that great damage was done to the defendants by the 600,000 pages of NECC internal emails which were seized in 2012 in a raid on the firm’s offices. Also, the chief medical officer at a major Boston hospital testified Thursday that he never signed or approved several apparently forged prescriptions that Cadden submitted to state regulators in response to a 2012 complaint.

The anesthesiologist from the Massachusetts Eye and Ear Infirmary was the final prosecution witness in a trial. Shown prescriptions for a large volume of an eye numbing agent, he said that he never approved them despite the fact that his name was listed on the forms as the prescribing physician. Shown prescriptions signed by other Mass. Eye and Ear physicians, he said the “prescribing” physicians would never have had a need for an eye numbing agent. One of them did rhinoplasty (nose jobs), while another was a plastic surgeon. A third doctor, whose name was on a NECC prescription, did cochlear ear implants to treat deafness.

The doctor testified that his facility had filed a formal complaint against NECC with the Massachusetts Pharmacy Board in 2012 after doses of the same eye-numbing drug proved ineffective, with both patients and their doctors registering complaints. The eye-numbing drug from NECC was found to have only 25 percent of the prescribed key ingredient, lidocaine. Initially, staff anesthesiologists at Mass. Eye and Ear prepared the numbing agent on a daily basis. The duty was later shifted to an in-house pharmacy and eventually to NECC because NECC supposedly offered a version with fewer risks of infection and a 30-day shelf life.

This dramatic testimony about forged prescriptions followed testimony by a former employee of NECC’s sales arm. She related how she and another employee, under Mr. Cadden’s direction, created 300 false prescriptions to make it appear that NECC had complied with a state law mandating patient-specific prescriptions.

An investigator for the state Pharmacy Board, who was assigned to look into Mass. Eye and Ear’s complaint testified that he sent a letter to Mr. Cadden with a series of specific questions about the preparation of the numbing drug and general information about NECC’s operations, including a list of licensed pharmacists and registered pharmacy technicians. Among the items requested were copies of the patient-specific prescriptions for the eye-numbing drug that were from the lot that triggered the complaint. Incredibly, the Board, in response, received forged and false prescriptions from Mr. Cadden.

The head of an environmental monitoring company that specializes in clean room inspection and monitoring was called as Mr. Cadden’s first witness. The principal of the company testified that he had done testing twice a year at NECC since the late 1990’s. Shown the results of the last test conducted on June 22, 2012, Cadden’s own witness said that the sampling for particulates in the primary clean room showed that it exceeded the requirements set by the U.S. Pharmacopeia and the International Standards Association.

While most compounding pharmacies do not engage in the blatantly criminal conduct if issue is Mr. Cadden’s trial, then are some lessons law abiding pharmacies can draw from this law-abiding pharmacies can draw this cautionary tale:

  • 1. Have your clean room inspected regularly by a qualified environmental monitoring company, and if their reports indicate contaminants, take immediate action to determine the source and take corrective action. Document your efforts.
  • 2. Do not, ever, ever lie to a federal or state investigator. Ever. Lies can land you in prison, and can destroy your business. We recommend clients designate a single individual, usually the pharmacist in charge, to handle all communications with State and Federal Regulators.
  • 3. Develop written standard operating procedures designed to comply with state and federal guidelines. Then once you establish those procedures, follow them.
  • 4. Have a written protocol in place for notifying customers if you discover a medication is adulterated, such as when lab testing shows non-sterile results. Follow that protocol.
  • 5. Don’t create counterfeit prescriptions! If you discover that your business has failed to limit its compounding efforts to patient specific prescription preparation, seek qualified legal counsel immediately.
  • 6. Provide training to your employees on their use of email communications, and establish (and follow) a lawful document retention policy. There was probably no good reason for this relatively small business to retain 600,000 pages of emails.
  • 7. Conduct regular inventories to identify expired compounds and have them safely destroyed.
  • 8. Train employees regularly on proper protocols designed to avoid contamination. Monitor compliance with that training, and take corrective action when employees do not follow established protocols.
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