When compounding pharmacies make mistakes, they seldom face harsh regulatory punishment , a review of legal cases by USA TODAY shows. More often, the real penalty comes via lawsuits for damages.
4:55PM EDT October 31. 2012 - WASHINGTON -- The legal landscape is littered with charges of negligence and misconduct by compounding pharmacies such as the one implicated in the nation's ongoing meningitis outbreak, but they rarely result in tough punishments, an examination of legal records shows.
In some cases, there's almost no penalty for pharmacies that break the rules, and the people who run them simply continue with business as usual, sometimes with tragic results.
Compounding pharmacies, which mix specialized and hard-to-get medications from raw ingredients, have been tied repeatedly to illness outbreaks -- the Food and Drug Administration has recorded about 200 "adverse events" linked to 71 compounded products since 1990. Some of those cases were eerily similar to the current meningitis episode, which has killed 28 so far.
USA TODAY reviewed state and federal court records, investigative reports and regulatory actions on dozens of cases in which compounding pharmacies produced contaminated or adulterated medication, mismeasured dosages, or manufactured and distributed drugs that were counterfeit or illegal. In many cases, it wasn't regulatory action that shut down those operations; it was damage awards they couldn't afford to pay.
The lightly regulated businesses have been linked through the years in government investigations to high-profile steroids scandals in sports and major tragedies involving veterinary drugs.
Through them all, there's a pattern: When a compounding pharmacy commits serious transgressions -- wrongs that endanger lives or involve large-scale criminal conspiracies -- the regulatory sanctions often are minimal. Tougher punishments frequently come in the form of personal injury lawsuits, which can elicit court-ordered penalties far more potent than, say, the suspension of a pharmacy's license.
Civil lawsuits are a powerful tool "to make sure the most dangerous compounding pharmacies are forced out of business," says Joanne Doroshow, executive director of the Center for Justice Democracy at New York Law School. "Nothing else seems to be doing it … because the entire regulatory system lacks teeth."
At least three personal injury lawsuits have been filed against the Framingham, Mass.-based New England Compounding Center, which state and federal investigators have identified as the chief suspect in the current meningitis outbreak. With more than 300 illnesses in at least 16 states, more claims are sure to follow.
The investigators have linked the outbreak to fungal contamination in injectable steroids that were produced by NECC and administered to an estimated 14,000 people for back pain. Last week, the Massachusetts Board of Registration in Pharmacy permanently revoked NECC's state operating license, as well as the licenses of its three chief pharmacists, after documenting multiple problems with sanitary conditions and quality control at NECC's facility.
But that's the board's only bullet: Like many state pharmacy boards that regulate compounding operations, the Massachusetts panel has no power to issue fines for wrongdoing. Because compounding pharmacies produce medications outside the strict federal regulations that govern traditional drug manufacturers, the FDA has limited authority over them.
Criminal penalties are possible -- criminal investigators from the U.S. Justice Department and the FDA are involved in the NECC probe. But such prosecutions are extremely rare, in part because the law makes it very difficult to hold pharmacists criminally liable for problems with the drugs they produce or dispense.
Even state license revocations are rare: Among cases reviewed by USA TODAY, the NECC closure was the only time a state revoked a compounding pharmacy's license permanently. (Neither NECC nor its pharmacists have appealed the license revocations, though that option remains.)
"Clearly, (states) have the authority," to shut down a bad operator," says Sarah Sellers, a former FDA compliance official. "Whether they have the political will and the resources to pursue those cases is a question in my mind."
Sellers, who now runs Q-Vigilance, a drug-safety consulting firm, says she doesn't ever recall seeing another case in which a state shut down a compounding pharmacy permanently. She believes that might be due partly to the fact that state pharmacy boards often have members who operate or have interests in compounding pharmacies.
"If there is conflict of interest at the state level, that may be a contributing factor in the lack of enforcement," Sellers says.
Warnings in an earlier outbreak
In the fall of 2002, a spate of meningitis cases began cropping up in hospitals and clinics in North Carolina. In many respects, it was strikingly similar to today's outbreak: All the patients were sickened by a rare fungus after getting treated with an injectable steroid produced by an out-of-state compounding pharmacy. Even the drug was the same: methylprednisolone acetate.
When state and federal investigators inspected the facility where the drug was prepared, Urgent Care Pharmacy in neighboring South Carolina, they found faulty sterilization equipment and inadequate sanitary and quality-control practices. When they tested unopened vials of the suspect medication, they also found the fungus.
The pharmacy was ordered to stop selling the contaminated drug immediately, state investigation records show. Warnings went to 11 states where hospitals and clinics had gotten drug shipments from the facility. Several victims were hospitalized; one woman died.
The South Carolina Board of Pharmacy directed Urgent Care to halt work until it corrected major deficiencies in its sterile practices and oversight of technicians. Exercising an authority many pharmacy boards lack, the panel also levied a $10,000 fine and suspended the license of the pharmacist in charge.
Facing lawsuits from more than a half-dozen people who claimed injuries from the contaminated injections, Urgent Care declared bankruptcy three months later. But the pharmacist who managed the operation moved on and now works at a different South Carolina pharmacy. Reached at that store, he declined to comment.
In the same order that suspended the pharmacist, the board immediately issued a "stay" of that action. He was allowed to continue practicing pharmacy on a probationary basis, provided he pass a competency exam and refrain from compounding. Today, his licensure record shows that he continues to work and lists him "in good standing" with "no disciplinary action."
"The regulatory system failed," says Forest Horne, a Raleigh, N.C.-based lawyer who won a damage award of about $1 million for the family of the woman who died in the meningitis outbreak. "If that guy is able to go back and work in a pharmacy … I think the regulatory system is not working, because the conditions in that plant were absolutely abysmal.
"If these people aren't stopped through litigation," Horne adds, "they're not going to be stopped."
Dead horses and more lawsuits
But litigation can take years, and it doesn't always succeed.
In April 2009, 21 polo horses from a Venezuela-based team died while preparing to compete at the U.S. Open Polo Championship in Wellington, Fla. The deaths later were attributed to a medication that was mixed incorrectly by Franck's Pharmacy, a high-volume compounding operation that, like many, prepared veterinary drugs in addition to human medications.
Franck's acknowledged the dosing error even before federal investigators confirmed it, and owners of the horses filed a lawsuit seeking more than $4 million in damages from the pharmacy. But that case remains unresolved and is scheduled for a jury trial early next year.
After the horses' death, the FDA also filed suit against Franck's, contending its operations should be halted because it was acting as a drug manufacturer, using bulk ingredients to produce drugs on a large scale. As a manufacturer, Franck's would need FDA approval and be subject to agency inspections for compliance with strict federal rules on safety and quality.
But the court ruled that the pharmacy was within the boundaries of compounding, a centuries-old practice that focuses on mixing specialty medications that aren't available commercially. Franck's remained under the supervision of Florida's board of pharmacy. After reprimanding and fining Franck's in the horse incident, the board allowed it to continue operating in good standing.
It wasn't long before the pharmacy was tied to more problems.
In November, 2011, weeks after the FDA lost its case, a rare fungal infection began cropping up in the eyes of patients who had received ocular injections of a special dye used in eye surgery. A subsequent state/federal investigation conducted earlier this year linked the infections to contamination in vials of the dye prepared by Franck's.
In March, the pharmacy recalled the dye and a related product, and the U.S. Centers for Disease Control and Prevention warned doctors not to use any compounded products from Franck's that were labeled as sterile. In a May report, the CDC identified 33 eye infections in patients who had been injected with the products from Franck's. Three-quarters of the cases led to vision loss.
As damage claims began trickling in, Franck's closed shop.
On July 5, Franck's "turned in the permits required by Florida law to operate as a compounding pharmacy, sold all its assets, and terminated all its employees," according to a federal court filing. "There is no reasonable likelihood that they will return to (compounding) practices."
Steroids and other illegal drugs
The furor about contaminated medication has obscured another long-held concern about the oversight of compounding pharmacies: their involvement in the production and distribution of illegal or counterfeit drugs.
From the steroids-in-baseball scandals of the late 1990s to the more recent worries about illicit distribution of painkillers by so-called "pill mills," compounding pharmacies have been implicated repeatedly in all manner of drug scams. While even the industry's critics acknowledge that bad actors represent a small slice of the nation's compounding community, the lax regulation of those pharmacies makes it easy for them to tap illicit -- and lucrative -- revenue streams.
In his landmark 1997 report to the commissioner of pro baseball, former Sen. George Mitchell included a section dealing exclusively with the role of compounding pharmacies in the distribution of steroids and other performance-enhancing drugs. He noted that the pharmacies often are affiliated with "rejuvenation centers" that solicit customers through the Internet.
"When approached by a customer, the rejuvenation centers arrange for a corrupt physician to issue a prescription for the substance the customer wants to purchase, often without ever seeing their new 'patient' and without administering any medical tests," the report says. "The bad faith prescriptions are then filled by a compounding pharmacy (which sometimes manufactures the steroids or human growth hormone in its own laboratory) and sent to the user by mail."
In one recent case, the owner and operator of College Pharmacy, a compounding operation in Colorado Springs, was convicted in federal court of illegally distributing human growth hormone and steroids to body-building and "anti-aging" clinics without underlying prescriptions.
"College Pharmacy also promoted and sold the steroid … at (anti-aging) conferences and trade shows, despite the fact that neither "anti-aging" nor "body-building" is a medically necessary use for these drugs," the court wrote in a May ruling that affirmed the distribution conviction on appeal.
Similar arrangements have been alleged in the illicit distribution of painkillers.
In one ongoing case, the U.S. Drug Enforcement Administration seized hundreds of thousands of dollars in assets earlier this year from a compounding pharmacy in Georgia, asserting that it was part of an illicit distribution network for oxycodone and other narcotics. The pharmacy is alleged to have filled hundreds of prescriptions for a "pill mill" -- a pain clinic that writes prescriptions without medical justification.
However, no criminal charges were filed against the pharmacy in conjunction with the forfeiture; the pharmacy has denied any wrongdoing, and filed a motion in federal court to have its assets returned.
DEA officials acknowledge that their ability to police compounding pharmacies is limited. The agency does not inspect compounding operations routinely, but it does monitor purchasing records, because compounders have a DEA registration to handle controlled drugs.
"If we suspect that they are manufacturing, which would be a violation of their registration, we would look at that," says DEA spokeswoman Barbara Carreno. "If we see significant anomalies (in the data), that's a red flag for us."
But Carreno notes that regulatory authority for compounders lies mainly with state pharmacy boards. They have primary responsibility for ensuring that the pharmacies only issue drugs in accordance with underlying prescriptions, and they're the ones who are supposed to monitor the safety and quality of compounding operations.
Yet, the state boards often lack the resources and expertise to identify potential problems.
"The states have limited resources just like the FDA, and they could be going in maybe once every three years or only in for-cause situations," says Sellers, the former FDA compliance official.
That scenario is particularly risky when it comes to checking for problems with sterility or quality control, she adds, noting that "pharmacies can produce a lot of bad drugs in a period of three years." Sellers takes little comfort in the notion that civil lawsuits end up being a driving force in ensuring that pharmacies maintain adequate standards.
"That's your last resort for moving and furthering a public health agenda," she says.
Contributing: Donna Leinwand, Kaitlyn Ridel
Source: http://www.news.theusalinks.com/2012/10/31/harsh-punishments-rare-for-drug-compounding-mistakes/
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