Consumer Corner: Medicine That Kills

By Alan Marx, AARP Tennessee Consumer Watchdog

On September 21, 2012, a patient in Tennessee was diagnosed with fungal meningitis, a very rare disease.  The Tennessee case soon was followed by many more. The Center for Disease Control (“CDC”) found that 753 people in 20 states were diagnosed in 2012 with a persistent fungal infection after being treated with a preservative-free pharmaceutical known as methylprednisolone acetate (“MPA”).  64 people in 9 states died of the disease.  Some of the infected patients suffered strokes.

Roel Smart

The CDC found that the MPA was contaminated with a fungus.   Bacteria, viruses, or fungus can cause meningitis.  Of the three, fungal meningitis is considered the most difficult to treat because it can cause strokes.

Because fungal meningitis is so rare, few physicians have had experience dealing with it.  Many of the affected patients were elderly and had other health problems, which complicated the treatments options.  As of October 12, 2012, the CDC reported that the median ago of the fungal meningitis patients was 68 years old (ranging from 23 to 91 years old).  69% were female.

The CDC traced the MPA to the New England Compounding Center (“NECC”) of Framingham, Massachusetts, a compounding pharmacy that had manufactured, packaged, and marketed MPA for use in epidural steroid injections.   More than 17,676 vials of NECC’s MPA had been sold to medical facilities in 23 states and administered to up to 14,000 patients before September 24, 2012.   The Department of Justice later said that the outbreak was the largest public health crisis ever caused by a pharmaceutical product

What is a compounding pharmacy?
There is supposed to be a distinction between compounding pharmacies and drug manufacturers.  Compounding pharmacies are allowed to combine, mix, or alter ingredients to create formulations of drugs for individual patients whose needs cannot be satisfied with commercially available pharmaceuticals.   Compounding pharmacies are distinguished from drug manufacturers in several ways, one of which is that compounding pharmacies are supposed to make drugs only when a doctor has written a prescription for the drug, except for very limited quantities.  An example of a compounded product would be for a patient who has an allergy to an ingredient found in the commercially available equivalent product.  With a prescription, a compounding pharmacy would be allowed to produce a version of the drug without that ingredient.

At times compounding pharmacies have been able to provide drugs on a local basis when commercial versions of those drugs are in short supply.  As drug shortages have increased in recent years, some compounding pharmacies have operated on a larger scale.

There are approximately 56,000 pharmacies in the U.S.  About 7,500 of those pharmacies provide advanced compounding services, and approximately 3,000 of those make sterile products.  About 180 compounding pharmacies voluntarily submitted to inspections and met other requirements needed to receive a seal of approval from the Pharmacy Compounding Accreditation Board (“PACB”).  NECC was not accredited by the PCAB.

From 1938 until 1998 compounding pharmacies were regulated by the Federal Food and Drug Administration (“FDA”), which had sole authority to regulate drug manufacturing.  However, in 1998 Congress exempted compounding pharmacies from FDA oversight, despite strong objections from then-FDA Commissioner David Kessel.  As a result, compounding pharmacies thereafter were required to register with the FDA, but were not required to register as drug manufacturers.  The FDA did not have the authority to approve their prescriptions before marketing and did not automatically receive adverse events reports for incidents involving their products.  State law generally controlled the record keeping, certifications, and licensing for compounding pharmacies.  A 1997 law gave the FDA authority over some compounding pharmacies, but in 2002 the U.S. Supreme Court struck down that law.   While the FDA continued to assert that it could regulate compounding pharmacies under certain circumstances, its claim was not included in a regulation and did not have the force of law.

The gap between federal and state oversight left the door open for abuse.  While many compounding pharmacies played by the rules, some compounding pharmacies increased their sales by offering their products at lower prices than those charged by the major drug manufacturers.  In doing so, those compounding pharmacies skirted or evaded the individual prescription requirement and became drug manufacturers without complying with the regulatory requirements and the more stringent oversight of the FDA.

The New York Times noted that physicians in some hospitals may not have known whether the medicine they used came from a compounder.

The History of NECC
Almost from its inception NECC had a checkered record.  After the wave of fungal infections in 2012, the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee prepared a detailed report on NECC’s history.  The company opened in Massachusetts in 1998.  It was owned and directed by Barry J. Cadden, his wife Lisa Cadden, and her brother Gregory Conigliaro.  Within less than a year Barry Cadden received an informal reprimand from the Massachusetts pharmacy board for the company’s practice of providing doctors with blank prescription pads containing NECC’s information, a practice not permitted in Massachusetts.  He was accused in other complaints of engaging in unprofessional conduct.  On occasion Cadden refused to cooperate with investigators and challenged the state board’s authority to regulate his business.

In 2002, the FDA investigated reports of patients who became dizzy and short of breath after receiving an NECC steroid (not the one involved in the 2012 cases) to treat joint pain and arthritis.  On the second day of inspections into those complaints, Cadden told the inspectors that he was not willing to provide additional records.  The FDA did not pursue the investigation.

In 2012, the FDA also investigated reports that two patients in Rochester, NY, had symptoms of bacterial meningitis after receiving injections of MPA.  Cadden said that vials of the steroid returned from the hospital had tested negative for bacterial contamination, but when FDA scientists tested samples collect in New York, they found contamination in four of fourteen vials.

The Investigation of the 2012 Infections
The U.S. Congress, the Department of Justice, the CDC, the FDA, and many other federal and state agencies investigated the causes and results of the 2012 infections.    The Department of Justice said that the outbreak was the largest public health crisis ever caused by a pharmaceutical product. It determined that Cadden had directed and authorized the shipment of contaminated MPA to NECC customers nationwide.  Before the drugs were shipped their sterility should have been tested, but the enforcement authorities found that Cadden had authorized shipping before the test results were returned (usually about 14 days), and that he never notified customers that the tests showed nonsterile results.  Some of the compounded drugs contained expired ingredients.  An unlicensed pharmacy technician at NECC manufactured, at least in part, certain batches of the drugs.  In addition, the enforcement authorities found that Cadden repeatedly took steps to shield NECC’s operation from FDA oversight by claiming that the drugs were dispensed under valid, patient-specific prescriptions, when in fact NECC used false names on fake prescriptions.  Names such as “Michael Jackson,” “Freddie Mae,” and “Diana Ross” were cited.

In October and November, 2012, Congress held hearings on the outbreak, focusing on the need for legislative action to strengthen federal drug safety regulations.  At those hearings, the co-owner of NECC refused to answer questions, invoking his Fifth Amendment right against self-incrimination.

The Criminal Case Against Barry Cadden
On December 17, 2012, federal prosecutors in Boston unsealed a 131-count criminal indictment.  It alleged that from 2006 to 2012, NECC knowingly sold drugs that were mislabeled, unsanitary, or contaminated.  Barry Cadden, as the owner and head pharmacist of NECC, and Glenn Adam Chin, the supervisory pharmacist for NECC, along with other NECC executives, were named in the indictment which alleged 68 overt acts in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”).  Cadden and Chin were charged with 25 counts of second-degree murder for the deaths that had occurred in seven states.

Cadden was tried in federal court.  In March 2017, a jury found him guilty of racketeering, racketeering conspiracy, mail fraud, and introduction of misbranded drugs into interstate commerce with the intent to defraud and mislead, although he was acquitted of second-degree murder.  On June 26, 2017, U.S. District Court Judge Richard G. Stearns sentenced Cadden to serve nine years in prison, to be followed by three years of supervised release.  Cadden was also subject to an order requiring forfeiture and restitution in amounts to be determined later.

Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division said Cadden put “profits ahead of patients.”  Readler also said “Under his direction, employees assured customers that they were getting safe drugs, while Cadden ignored grave environmental failures, used expired active ingredients, and took innumerable other production shortcuts that led to numerous, entirely preventable deaths.”

The Criminal Case Against Glenn Adam Chin
Glenn Adam Chin was responsible for supervision the clean rooms at the NECC.  An FDA affidavit stated that Chin used improper sterilization and testing techniques, unsafe practices, falsified cleaning logs, and ordered pharmacy technicians to fraudulently mislabel vials.

On December 4, 2014, Chin was arrested at the airport in Boston as he was boarding an airplane to Hong Kong.  He was charged with one count of mail fraud.  Additional charges were added later.

Chin’s trial in 2017 lasted for approximately five weeks.  A microbiologist from the FDA testified that she was surprised to find nearly a dozen mold growths in the NECC clean room after it had been cleaned for two days.  Mold was found at nearly a dozen locations where sterile drugs were being compounded, “a high level of contamination.”  Pooled water was found near a boiler.  Grass was present on the sticky mats NECC cleanroom workers walked over on their way into the drug preparation area.  The general condition of the room and some of its equipment were described as “very dirty.”

The Tennessean reported that the head of quality control at NECC testified that the president of the company sent a completely falsified report to state regulators while the deadly fungal meningitis outbreak was occurring.  She said the report showed nearly perfect scores on environmental tests, which were false.  She testified that despite her position, she was never shown the document before it was sent to the Massachusetts Board of Pharmacy.

On October 25, 2017, after three days of deliberations, a jury convicted Chin of more than 40 counts of mail fraud, racketeering, racketeering conspiracy, false labeling, introducing adulterated drugs into interstate commerce, and multiple other charges.   He was found not-guilty of second degree murder.

On January 31, 2018, Chin was sentenced to eight years in prison for his role in the NECC fungal meningitis infections.

Bankruptcy of NECC and Damage Actions
On December 21, 2012, the company filed for Chapter 11 bankruptcy protection.  It no longer was operating its business. Many lawsuits had been filed against NECC for damages resulting from the Fungal meningitis infections and deaths.  In May 2015, a $200 million settlement was approved to compensate the victims and their families.

The Drug Quality and Security Act
Speaking of the outbreak, Scott Gottlieb, the Commissioner of the FDA, said “Patients should not have to worry about the safety and sterility of the drugs they are prescribed.  Since this tragedy, Congress has given the FDA important new authorities, and the agency has implemented key policies, all to provide a greater assurance of safety over compounded medicines….”

The law that Commissioner Gottlieb referred to is the Drug Quality and Security Act (H.R. 3204), a bill to grant the FDA more authority to regulate and monitor the manufacture of compounding drugs.   It passed the House of Representatives by a voice vote on September 28, 2013, passed the Senate in November, and was signed into law by President Obama on November 27, 2013.

Conclusions
The subject of this blog is consumer protection, with particular emphasis on acts that harm seniors.  Most of these columns focus on financial scams and frauds.  However, this blog is about a type of consumer abuse that is far more dangerous to everyone - actions that result in the loss of life and health.

We live at a time when the term “regulation” is sometimes treated with contempt, almost used as a four-letter word.  The concept of deregulation has been used as a blunderbuss.  Unquestionable there are regulations that harm business and that have long outlived their utility, if they ever had a reason to exist in the first place.  However, to remove regulations on a wholesale basis without considering the consequences puts the public at risk.  Not all businesses are ethical and responsible, and when they are not, the free market does not always self-correct.  When the manufacturer of a medicine acts so irresponsibly that patients are killed or injured, not healed, it is time to draw the line.  For this type of conduct, only government has the power and resources to stop the illegal actions by enacting laws and applying them through vigorous enforcement of regulations.