Categorized | Consumer Protection

Meningitis Litigation: NECC owners received $16M prior to closure.

The AP (1/23, Lindsay) reports that the owners of the specialty pharmacy in Framingham, Massachusetts, that was linked to the recent fungal meningitis outbreak, “received more than $16 million in wages and payments as the company grew increasingly prosperous in its final months.” According to a bankruptcy court document filed Friday, the “four family members, who served as the New England Compounding Center’s directors, received the money between late December 2011 and late November 2012.” The filing also revealed that before it discontinued production in October, the NECC had “increased its net sales from about $20 million in 2010 to $32 million in 2012…with a quarter of the year remaining.”

        According to Reuters (1/23, McLaughlin), a committee of unsecured creditors, which also includes victims of the contaminated steroid products, has formed to determine whether the NECC acted improperly when it made the insider payments. David Molton, an attorney at Brown Rudnick LLP who is representing the committee, explained that the group is investigating whether the NECC should have used the money to improve the pharmacy’s manufacturing practices and compensate the meningitis victims.

        The Boston Globe (1/21, Wallack, 250K) noted that “the compounding pharmacy suspended operations after government investigators tied the outbreak to contaminated steroid injections made by the company – largely to treat back pain – and shipped to clinics across the country.” The article recounts that “at least 44 people have died and 678 have become ill in 19 states from fungal meningitis or other complications after receiving the shots, according to the federal Centers for Disease Control and Prevention.”

        The National Law Journal (1/23, Qualters) also covers this story.

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