U.S. pharmacy tied to meningitis outbreak files for bankruptcy protection
A Food and Drug Administration Agent stands at the doorway as investigators work inside the New England Compounding Center in Framingham, Mass., Tuesday, Oct. 16, 2012. (AP / Bill Sikes)
The Associated Press
Published Saturday, December 22, 2012 8:34AM EST
BOSTON -- A pharmacy connected to a deadly nationwide meningitis outbreak filed for bankruptcy protection and said it was seeking to set up a fund to pay victims.
Contaminated steroid injections from the New England Compounding Center have been blamed for 39 deaths and 620 illnesses since the outbreak began over the summer. The Chapter 11 filing in U.S. Bankruptcy Court on Friday shields the company from the threat of creditor lawsuits while it establishes the fund.
The company said in its filing that 130 lawsuits have been filed against it and 270 other people have claimed injury from the tainted drugs.
"The number or lawsuits and demands is rising on a daily basis," the filing read. "The sheer volume and wide geographic distribution of cases -- bringing the prospect of chaotic, conflicting and value-destroying pretrial orders and remedies -- has necessitated commencing this case at this time."
NECC, based in Framingham, just west of Boston, said it has hired accountant Keith D. Lowey to lead the effort to set up the compensation fund.
"The Company's goal is to provide a greater, quicker, fairer and less expensive payout to its creditors than they could achieve through piecemeal litigation," the filing read.
In a statement, Lowey said, "Many families across the U.S. have been impacted by this great tragedy, and it is difficult to comprehend the sense of loss so many people have experienced."
"Everyone associated with New England Compounding Center shares that sense of loss," Lowey said. "We recognize the need to compensate those affected by the meningitis outbreak fairly and appropriately."
Attorney Kimberly Dougherty, whose firm represents 30 plaintiffs, said NECC lawyers have said they intend to "do the right thing" for outbreak victims.
"We are hopeful the defendants mean what they say," she said. "If they do mean that, we can all work together and resolve these things as quickly as we can."
Dougherty said NECC has made it clear it doesn't have enough money to fully compensate victims "to the level and degree of their injury." She said her firm inspected the pharmacy before the bankruptcy filing and believes it has discovered other parties that might be liable, but she said she couldn't name them.
"We're looking for additional people who are responsible here for the compromise that occurred," she said.
New England Compounding Center was founded in 2006 by brothers-in-law Barry Cadden, the company's chief pharmacist, and Gregory Conigliaro. Compounding pharmacies custom-mix medications in doses or in forms that generally aren't commercially available.
Meningitis is an inflammation of the lining of the brain and spinal cord. The fungal meningitis outbreak was discovered in Tennessee in September, though Centers for Disease Control and Prevention officials say the earliest deaths tied to the outbreak date back to July.
Health officials say as many as 14,000 people received the steroid shots, mostly for back pain. In early October, the company issued a nationwide recall of the steroid and ceased operations. Later that month, Massachusetts moved to permanently revoke the company's pharmacy license after inspectors found unsterile conditions at its Framingham facilities.
State officials charge the company with violating its state license, which permitted the company to make drugs only for individual patients based on specific prescriptions. Instead, state officials say, the company made large batches of drugs for broad distribution.
NECC had said it always strove to follow the laws in the states it operated in.
According to Friday's filing, the bankruptcy court has granted the company extra time to file its schedules of assets and liabilities and statement of financial affairs.