Regulators had Many Chances to prevent Meningitis Outbreak caused by Compounder NECC

Posted by PITHOCRATES - October 28th, 2012

Week in Review

Compounding is basically making small batches of custom medicines.  A pharmaceutical company may mass produce a pill that a few patients may be allergic to the hard pill coating or want it in a liquid form.  So the compounder makes these custom medicines.  So these are small labs producing small batches of medicine.  Where the small volume of medicine allow a very high level of attention to detail during the production process.  Including many safeguards and precautions.  The problems at NECC happened when they were no longer making small batches in a small lab.  Their problems started when they started acting like a large pharmaceutical company while still using production procedures of a small lab (see Insight: Red flags ignored for years at firm in meningitis crisis by Toni Clarke and Sharon Begley posted 10/26/2012 on 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…

…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…

NECC was formed in 1998 by Cadden and his in-laws, the Conigliaro family, with a $5,000 investment, state records show.

So regulators knew about violations for a decade or so and yet never closed them down.  In fact, after numerous violations NECC asked for some leniency in the regulator’s final action.  Which they got.  Because it’s in the power of a state regulator to do that.  For that’s the power of a state bureaucrat.

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 October 3, NECC was supplying hundreds of hospitals across the country, according to a list of customers released by the FDA…

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 pharmaceutical industry is a highly regulated industry.  Which adds regulatory compliance costs.  Lawyers often sue pharmaceutical companies.  Because sometimes pills make it through the FDA approval process and yet still hurt people.  Which also adds further costs.  And despite the high cost of medicine pharmaceutical companies can have pressures on profits.  Causing them to drop certain medicines.  Leading to shortages.  And opening the door to compounders.  Who operated under lower overhead costs.  Allowing them to offer scarce medicines at low prices.

So that’s the background to this unfortunate crisis.  Regulators may have created the environment that encouraged the rapid growth of NECC.  And regulators failed to prevent this unfortunate crisis by going easy on NECC despite a record of violations.  What ultimately shut down NECC?  When their drugs started killing people.  For even if no one took any action against them and allowed them to stay in business no one would buy any of their drugs.  Because they were unsafe.  Which is a powerful incentive NOT to sell drugs that kill people.  Not to mention avoiding civil suits and criminal charges.

NECC probably meant no harm.  Nor did the regulators that let them do harm.  But they operated for about a decade until the market shut them down.  Civil and criminal action may follow.  But that is after the fact.  The government didn’t protect the people until after people started dying.  Something the market would have done anyway without the help of government.  So is more regulation going to help make our medicine safer?  Or will it only further increase the costs of the pharmaceutical companies.  Leading to more medicine shortages?  And perhaps setting the stage for another NECC?

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