MAN-MADE EPIDEMIC A nationwide outbreak of a rare and deadly form of meningitis killed 64 people and sickened more than 750 who received contaminated steroid injections from the New England Compounding Center.

From the Boston Strangler to the Marathon Bombings, Beantown has had its share of spectacular killings. But the deadliest, most chilling of them all may turn out to be the medication contamination case going on trial this winter. At least 76 surgery centers, hospitals and pain clinics injected the hips, joints and backs of patients with steroids they'd bought from a family-run compounding pharmacy in a suburban Boston strip mall. Little did they know that a deadly fungus growing in many of the vials would spark a meningitis outbreak that would kill 64 people and sicken more than 750 others. All right under the government's nose. You may think you know the New England Compounding Center story, but you probably don't. And you should. Because without the vigilance of people like you, it can — and some think probably will — happen again, maybe on an even larger scale.

A family affair
The worst human-induced epidemic of the 20th century had its beginnings on an East Coast college campus in the '80s, the day Lisa Conigliaro met Barry Cadden at the University of Rhode Island College of Pharmacy. They would fall in love, marry, have 3 children, move into a charming converted barn and work as retail pharmacists in Rhode Island. Perhaps they'd still be living a quiet life today — perhaps 800-plus patients would, too — if Lisa had been an only child. But she wasn't.

The year the Caddens graduated, Lisa's entrepreneurial brother, Gregory Conigliaro, opened Conigliaro Engineering in a run-down building in Framingham, Mass. In 1991, Greg's company began recycling materials. It converted plastic, metal, glass and paper into recycling bins, flowerpots and pothole repair material. The go-getting Tufts University civil engineering grad decided to start the company on Earth Day 1990, and in just a few years had a growing business.

Then there was Lisa's other brother, Douglas Conigliaro, MD, a Florida anesthesiologist and pain management specialist. Since he used them all the time, Dr. Conigliaro was very familiar with the need for injectable medications for pain management.

Only the family knows the conversations that took place, but in 1998, the Caddens and the Conigliaros decided to combine their talents, entrepreneurial drive and know-how and formed the New England Compounding Center (NECC).

Since sterile compounding requires clean rooms, it might have made sense to locate the pharmacy in an office complex. But Greg already owned industrial property at 701 Waverly St., in Framingham, so the family decided to locate in his compound, right next door to the recycling plant. FDA and Massachusetts state pharmacy board investigators would later observe that NECC's HVAC units were positioned only about 100 feet away from the recycling facility and the plumes of infectious dust its excavators and dump trucks produced.

The new company's web page proclaimed NECC was devoted to helping doctors prescribe drugs that are "no longer manufactured, persistently back-ordered, not commercially available in the dosage form the patient needs." It touted NECC's "rigid quality control policy," which included "documented, independent testing for sterility."

Presumably, Doug and his wife, Carla, provided much of the startup funding, because Carla owned 55% of the company. Mr. Cadden served as president, chief pharmacist and director of NECC. Lisa, Barry's wife, was a board member and also worked as a pharmacist. The couple owned 33%, and Greg the remaining 10%.

While traditional independent pharmacies were beset by chain and mail-order Rx competition, compounding offered a niche. You needed only about $200,000 to start up a small compounding pharmacy. The margins could be amazing. A lot of the business was private pay rather than third party.

And there was a special opportunity for a bold pharmacist. In traditional compounding, the doctor calls in an individual Rx, the compounder formulates it and sends it to the physician, or the patient picks it up. But there was also a market for bulk supplies of high-risk medications. A great example was unpreserved steroids for intrathecal injection. The drug was available in preserved form as Depo-Medrol. But pain specialists preferred the unpreserved variety for epidural injections. The Caddens and Conigliaros apparently saw that in certain areas, NECC could basically be a drug manufacturer masquerading as a pharmacy, without observing the FDA regulations drug manufacturers must endure.

Between the cracks
For their enterprise, the regulatory karma could hardly have been better. All pharmacies, including compounding pharmacies, had been until that time regulated by state pharmacy boards. FDA had no authority over them, a fact that was chafing FDA Commissioner David Kessler. Two years earlier, in 1996, he prophetically warned Congress that drug-compounding pharmacies that were mass-producing drugs without observing Good Manufacturing Practices would create a "shadow industry of unapproved drugs that could result in serious adverse effects, including death."

So the next year, in the massive Food and Drug Modernization Act, Congress clarified the rules. Section 503A essentially endorsed compounding done by a licensed pharmacist or physician, but only if the professional were making the drug for an individual patient with a valid Rx, and only if an FDA-approved drug would not serve. Any other drug production would be deemed manufacturing, and place the pharmacy under the same rigid FDA restrictions companies like Merck and Pfizer had to observe. The law also restricted the types of drugs pharmacists could make and the materials from which they could make them. Finally, the law prohibited compounding pharmacists from soliciting prescriptions and advertising the drugs they made. They could only advertise their services.

That last provision proved to be a debacle. The next year, 7 compounding pharmacists sued, saying the advertising and solicitation portion of the law restricted their freedom of speech. In Thompson v. Western States Medical Center, a Nevada District Court agreed, and the Ninth Circuit Court of Appeals (covering 9 western states) ruled the entire law unconstitutional, not just the advertising portion. And eventually the Supreme Court upheld the decision regarding advertising, but, confusingly, did not comment on whether the rest of the law could remain in force.

In the opinion, the Supreme Court suggested that Congress devise a better way to differentiate small compounding pharmacies from compounders acting as stealth manufacturers. Legislators tried in 2003 and 2007, but the International Academy of Compounding Pharmacists beat back both attempts, arguing that additional regulations would "negatively impact patient access to necessary compounded prescription medications."

DEFIANT "NECC repeatedly disputed FDA's jurisdiction over its facility," says Food and Drug Administration Commissioner Margaret A. Hamburg, MD.

FDA fights back
Bloodied but unbowed, FDA crafted guidelines to help its enforcement staff know when a compounder transmogrified into a manufacturer. One defining practice, FDA said, was "manufacturing large quantities of unapproved drug products in advance of receiving a valid prescription." In its policy statement, the FDA said it would defer to state pharmacies to prosecute small-time infractions, but would "seriously consider enforcement action" when a compounder started to resemble a manufacturer.

Compounders thought that was still too strict, and in early 2005, a group of them filed suit in Midland, Texas, challenging FDA's ability to regulate compounding at all. In Medical Center Pharmacy vs. Gonzales, the District Court agreed with the compounders, holding that compounded drugs were "implicitly exempt" from FDA's "new drug" definition. FDA appealed, and the Fifth Circuit reversed the decision. That court said the 503A law could remain in effect, minus the advertising restrictions. So now in the Fifth Circuit (Texas, Louisiana and Mississippi), section 503A appeared to be back in force, but not in states west of the Rockies, where the Ninth Circuit decision held sway. What to do? The FDA legal department was buffaloed.

Murky is how FDA Commissioner Margaret Hamburg, MD, described who had legal authority over compounding in later testimony. "We have different legal frameworks that govern different states, yet we have an industry that operates across state boundaries," she said. "We don't have the kind of authority that we need, and we don't have the kind of clarity of the legislation that we need."

REGAINING TRUST
Can You Be Sure Your Compounder Is Safe?

DUE DILIGENCE Be sure to investigate the drug compounders with whom you're considering doing business.

Just as 9/11 changed air travel, the New England Compounding Center debacle has changed how we manufacture, distribute and administer drugs. The industry has gotten much better as a result, but we still need checks and balances. FDA really stepped up as a result, but surgical facilities naturally still have some qualms about doing business with drug compounders. Here are 5 ways can you be more confident in your compounder.

• Know FDA designations. Large-scale entities engaged in non-prescription anticipatory compounding must now register with the FDA as 503B compounders. But the elaborate FDA inspection that follows doesn't always happen immediately, so there's a period when compounders may call themselves 503Bs, before they're approved by the FDA. You can monitor the status of all 503Bs on the FDA website (osmag.net/mpham4), along with inspection dates, violations, and whether those violations have been addressed. Of course, that process is just the price of admission before you even consider doing business with a compounder. There are always going to be human elements involved, so you still need to monitor and share information.
• Know what to look for. The American Society of Health-System Pharmacists recently issued detailed guidance designed to help facilities evaluate and compare pharmaceutical services and compounders (osmag.net/3bzuaa and osmag.net/6vjyyz). Among other topics, they cover strategic planning, contract provisions and negotiations, and how to evaluate performance. That's something that hadn't been available in the past. In the wake of the NECC scandal, there's been increased emphasis on developing tools, resources and guidelines that help facilities know what to look for.
• Do quarterly audits. Is your compounder willing to provide quarterly reports that show what tests they've done and the results? You want to know how many batches were rejected internally, and why. Are there process problems? A problem with a certain product? You should ask about cleaning, environmental sampling and monitoring, too. If more bioburden is showing up, why is that? Has something changed with equipment or the cleaning staff? How did this quarter compare to previous quarters? You want to have as many eyes on the process as you can.
• Be wary of evasion. You'll know if you're getting the proverbial smoke screen or if somebody is hesitating to share data. Compounders should be very willing to open up their records and chat about what they're doing and what they're seeing. That transparency creates comfort.
• Emphasize quality over price. When people are forced to try to do things as inexpensively as possible, the system doesn't reward quality. If one compounder seems much cheaper than everyone else, the big question has to be why. What is it that they're doing differently? There are always going to be those who want to push the envelope. That means there's always going to be risk. All involved need to have a clear understanding that delivering a quality product requires time and a methodical process.

— Joseph Coyne, RPh

Mr. Coyne ([email protected]) is an executive healthcare consultant and president of Coyne Consulting in Mundelein, Ill.

NECC joins the fray
Into this lightly regulated climate, NECC was born. In its first 4 years, NECC appears to have grown slowly. In 2002, according to an FDA inspection report, Mr. Cadden claimed the firm only dispensed 20,000 Rx's per year. The pharmacy was licensed in just 10 states.

But things started heating up in 2002, when the family opened another company in the same Framingham building, called Medical Sales Management. MSM, led by Dr. Douglas Conigliaro, formed to exploit the very advertising and marketing opportunities Congress had tried but failed to prevent. As the sales arm for New England Compounding, Medical Sales Management exhibited at trade shows and cold-called customers.

MSM seemed to inject new energy into NECC. The company rented another suite from brother-in-law Greg Conigliaro and doubled its floor space. Within just a couple of years the company was doing business in all 50 states. In the next decade NECC's customer base would grow from 100 to 3,000 hospitals, surgery centers and physician practices. By 2012, annual sales would top $30 million.

At about the same time, however, a pattern of serious quality problems was surfacing at NECC.

It started in July 2002, when the Massachusetts Board of Pharmacy received complaints about 4 patients falling ill after being injected with NECC compounds: 2 from betamethasone, 2 from methylprednisone acetate. The methylprednisone turned out to be both too strong, or "superpotent," and contaminated by Burkholderia cepacia and Sphingomons paucimobilis, according to FDA inspection reports. The beta ?meth ?asone turned out to be underpowered, and tested positive for endotoxin. One patient who received tainted methylprednisone, William Koch, died 2 years later. NECC never admitted liability. The company settled out of court with his widow in 2007. Terms were not disclosed.

The FDA inspections that followed revealed that NECC was a complete mess. Inspectors found that the company had no way of reliably compounding suspensions at the right strength. The firm's ability to preserve the sterility of its medications was highly questionable. Inspectors identified 13 areas where NECC was risking sterility and improper formulations. There was no assurance that the equipment and workspaces were clean, no environmental monitoring of the clean room and many more concerns. NECC had purchased a standard operating procedure manual from a consultant, but the manual wasn't customized to NECC — and NECC wasn't following it anyway. NECC also did not maintain formal customer complaint files. It had no way of investigating errors when things went wrong.

When the inspectors asked Mr. Cadden about the tainted betamethasone, he at first claimed that the drug wasn't made at NECC, according to their report. They found the suspect lot on a computer printout. Also, the health professional who had reported the incident said he had spoken to Mr. Cadden about it personally.

The FDA report seemed to indicate that Mr. Cadden had a deep misunderstanding of how sterility worked. He admitted to investigators that another batch of "sterile" betamethasone had come back positive for endotoxin. He said he changed the suspending agent, made another batch and then covered the beaker with aluminum foil while awaiting the lab results. It could take from 7 to 10 days, he said. When the inspectors informed him that this practice was unacceptable, he responded that "he didn't want to waste the money on vials or transfilling the vials if thelot failed testing." According to the inspection reports, Mr. Cadden later said using aluminum foil "wasn't his usual practice" and then bizarrely denied that the beaker actually contained any betamethasone.

After a long discussion, the FDA and the state pharmacy board agreed that NECC was a pharmacy, not a manufacturer, and that the board was in the best position to force NECC into compliance. The FDA inspector recommended that the firm "be prohibited from manufacturing until they can demonstrate ability to make product reproducibly and dependably." If NECC didn't improve its practices, the FDA employees predicted there would be "serious health consequences."

In 2004, the Massachusetts Pharmacy Board sent NECC a letter offering to place NECC and Mr. Cadden on probation for 3 years for "professional misconduct." NECC would have to take several measures, including putting in place written policies and procedures and updating them on a quarterly basis. In return, the board would not prosecute Mr. Cadden.

FUNGAL OUTBREAK Shawn Lockhart looks at the meningitis-causing fungus Exserohilum rostratum at the mycotic lab at the Centers for Disease Control and Prevention.

NECC's attorney responded, claiming that NECC had already instituted all the board requirements with the help of "a national expert in Aseptic Compounding." That was a testament, the attorney wrote, to NECC's and Mr. Cadden's "commitment to quality assurance and regulatory compliance." The NECC facilities had passed 3 board inspections. NECC was now licensed in 44 states. Accepting the disciplinary action would be "potentially fatal" to the business because of the "collateral consequences" to the other 43 licenses. The members of the pharmacy board voted unanimously to deny NECC's proposal for lenient treatment. Ultimately, though, for reasons not publicly known, the board then decided to back down, placing NECC on a suspended 1-year probation contingent on an independent evaluator's assessment of its compliance.

As NECC and the board bantered back and forth, an FDA inspector showed up at NECC, along with 2 representatives from the state pharmacy board, prompted by a complaint from a competing manufacturer about a substance called Trypan Blue, a dye used in cataract and heart procedures.

The inspectors confirmed that NECC did have a new set of written procedures for compounding. However, when the FDA inspector asked Mr. Cadden questions about compounding Trypan Blue, he "became indignant" and said he didn't have time to answer questions. When asked whether he had Trypan Blue in stock, Mr. Cadden said no. The investigators then discovered 189 vials of the substance in a drawer in the clean room.

In all, the Massachusetts board investigated 8 complaints against NECC between 1999 and 2004 for unprofessional conduct, unethical conduct and failure to adhere to the standards of practice. Never did the board deliver more than a slap on the wrist. The agency did not return phone calls for this story.

In a 2006 report, the independent evaluator the board hired wrote that NECC had made "significant improvements" but still had a long way to go to be in compliance with USP standards. The firm needed better documentation, needed to actually follow procedure, needed to do adequate sterility testing and needed to do a total redesign of Clean Room 1 (floor, ceiling, HVAC). Mr. Cadden agreed to replace the HVAC, but suggested the other improvements weren't needed. Apparently that was enough for the state pharmacy board. It agreed that he had satisfied the terms of the consent agreement.

Meanwhile, the FDA continued its pursuit. A 2004 inspection revealed that NECC was manufacturing drugs in volume, without individual Rx's for individual patients, also a violation of FDA policy. When challenged, Greg wrote back that "[w]e always compound only the amount we anticipate will be required based on our prescribing physician's historical patterns. We are a small-scale, family-run, compounding-only pharmacy, not a manufacturer." According to FDA Commissioner Hamburg, "NECC repeatedly disputed FDA's jurisdiction over its facility."

The FDA also discovered that NECC had concocted something called "Extra Strength Triple Anesthetic Cream," which contained benzocaine, lidocaine and tetrocaine; and had sent samples to physicians. The FDA pointed out that the ingredients could trigger a heart attack, convulsions or allergic reactions. Like many other compounders, the company was also splitting up vials of Avastin for intravitreal injections, but NECC had poor control over the storage of the solution and timing of the administration of the drug, increasing the chances of infection and endophthalmitis.

In his response, Mr. Cadden was combative. FDA had no jurisdiction, he argued. "NECC does not compound copies of FDA-approved commercially available drugs, introduce unapproved new drugs into interstate commerce, does not need approved NDAs before dispensing its compounded medications and does not process or repackage approved drugs in a manner that would subject us to FDA regulation. NECC dispenses compounded medications upon the receipt of valid prescriptions."

FDA answered the letter contesting most of Mr. Cadden's claims and advising him to correct the violations. It employed some tough language. "Your firm must promptly correct the violations Failure to do so may result in seizure of the firm's products and/or an injunction against the firm and its principals."

The threat turned out to be empty. FDA's attorneys remained paralyzed over the agency's legal authority over compounding. As a Senate committee staff report would later admit, enforcement "proved to be complicated. ...The jurisdictional issues had become so unclear that the agency appeared to be unable to balance the risk of litigation against the public health risk."

MARK KLASERNER says his bout with meningitis has left his body too old for his age.

In the summer of 2012, when the pain in Mark Klaserner's back got to be too much to tolerate, his doctor recommended a lumbar discectomy and decompression. But when his insurance company said it wouldn't pay for the procedure, he had to settle for yet another shot of steroids instead.

Nearly 4 years later, Mr. Klaserner, 60, continues to pay a steep price for that decision. The steroid injection, given at Michigan Pain Specialists, in Brighton was contaminated, and he became one of hundreds nationwide to contract fungal meningitis.

"Shortly after I got the shot, I went to Colorado for the birth of my grandson," he recalls, "and I started getting calls from my doctor." When he heard something about a meningitis outbreak on the national news, he figured he'd better return the calls.

Soon he was in the hospital, where he'd remain for 43 days and gain 80 pounds. He got out just before Christmas, and quickly lost the extra weight, but his life had been permanently altered.

"I'm always getting sick and I'm not able to keep food down," he says. "If I get bit by a bug or something, it turns into a big deal. Everything is just kind of out of whack."

A former tool and die maker, he now lives in Littleton, Colo., and has been declared permanently disabled. "I can't stand or do anything long enough," he says. "The pain meds are too powerful. No one would hire me. I can't work and I burned up my retirement money." He'd planned for retirement, he says, but he hadn't planned on being retired at age 57.

He tries to remain as upbeat as possible, he says: "My future's pretty bleak, but I'm not going to complain. I have my grandson, Hudson, and I hold onto that very tightly, because I get very depressed very easily.

"Doctors have told me that my body is too old for my age," he adds. "I can't prove it, but I know for a fact that I lost at least 10 years of my life from that injection."

— Jim Burger

The troubles continue
In 2007, FDA's concerns about NECC and Avastin came true. A patient administered NECC Avastin developed severe endophthalmitis. FDA took no action.

Later in 2007, a pain specialist complained that some vials of NECC betamethasone were discolored, with floating particles. He discarded those and used the rest, but then more than 100 patients began complaining of pain and flu-like symptoms. He identified 3 lots of medication and provided FDA one to test. It cultured negative. The matter ended there. FDA did nothing.

In 2008, a Los Angeles patient had to be hospitalized after receiving NECC IV phosphatidylcholine. After infusion, the patient complained of a burning sensation and his arm swelled up. He vomited and urinated blood, and he couldn't swallow food or liquid. After 3 ER visits, a physician found blood clots in his arm and hand. FDA analyzed a sample of the drug and found it to be too strong, but took no action.

In 2011, the Colorado Board of Pharmacy complained to the FDA that NECC was sending hyuloronidase to a hospital without patient Rx's. In a cease and desist order, the board demanded that NECC stop distribution in the state. The FDA suggested contacting the Massachusetts Board of Pharmacy. The Colorado board did so, and director James Coffey said the board would respond "as soon as possible." Mr. Coffey forwarded the message on to the board's attorney, but ultimately did not order an investigation. He was later fired.

KATHY PUGH had to quit her job to take care of her bedridden mother, Evelyn Bates-March, who requires around-the-clock care after contracting fungal meningitis from tainted steriods.

Kathy Pugh hadn't planned to retire at 60, but her mother's deteriorating condition left little choice. "I knew I had to either quit my job or put her in a nursing home," says Ms. Pugh, now 63.

In 2012, Evelyn Bates-March, then 81, was full of life, says her daughter: "She was such an active woman. She walked the dog, she gardened, she kept her house clean, she cooked, she baked." Then came the tainted steroid shot that eventually led to fungal meningitis.

Now 85, Ms. Bates-March is bedridden and requires 24/7 care, says Ms. Pugh, of Pinckney, Mich. "She can't go the bathroom by herself, can't care for herself, I do it all."

It's easy to forget that the outbreak is still profoundly impacting many lives, says Ms. Pugh. "People think there was a tragedy, people died, people got sick, they went to the hospital, they got treated and now they're home and they're fine," she says. "That's not the case."

Her mother's precipitous decline was preceded by weeks of anxiety over news that she might have been infected. When the worst was confirmed, she was hospitalized and given the powerful anti-fungal drug Vfend (voriconazole), which is known to cause hallucinations. "I got a call at work," says Ms. Pugh. "She had ripped out her catheter, grabbed her walker and purse, and was heading out, because (she thought) terrorists were killing everybody and piling the bodies up."

She's been off the medication for a couple of years now, but still has flashback hallucinations. "She's just gotten weaker and weaker," says Ms. Pugh. "She never bounced back."

Will justice prevail? "This was a domestic covert act of terrorism," she says. "It was no different than someone releasing sarin gas on a train or airplane. To me justice would be to have (NECC president) Barry Cadden go to prison, be given an injection of his steroids every day, and to have to be on the anti-fungal medication for the rest of his life."

— Jim Burger

The Ameridose opportunity
Buoyed by NECC's success, in 2006 Mr. Cadden and Greg Conigliaro decided to take advantage of another opportunity. Hospital compounding pharmacies were overloaded with work filling IV bags and syringes. At least 2 companies, Central Admixture Pharmacies (CAPS) and Pharmedium, were already successfully providing outsourcing services. The newest Cadden-Conigliaro company, Ameri ?dose, would focus on this business. Based in the same industrial complex along with the recycling facility, Ameridose could fill IV bags with hundreds of different meds, including antibiotics, cholinergics, hep ?arin and the like. Ameridose offered syringe-filling, too. The Ameridose web page invited hospitals to free up their pharmacy staff to focus on outcomes and patient safety. It said hospitals could be totally confident because the company used the strictest standards. The experienced pharmacists were well versed in state laws, FDA and DEA regulations, cGMP requirements and USP Chapter 797.

Both businesses grew quickly, but Ameridose was the bigger success story. Neither company made its sales figures public, but according to several sources, Ameridose would employ nearly 400 workers by 2011 and gross more than $400 million annually. It was on contract with several GPOs. NECC would employ about 50 workers and gross more than $30 million.

The safety practices at Ameridose once again fell far short of the marketing promises. According to a congressional investigation, FDA received numerous complaints.

In Ameridose's first year, an unnamed source told FDA, "I strongly suspect ... they are ignoring (Good Manufacturing Practices) when preparing these products. I fear a large-scale epidemic of serious infections may occur."

FDA inspected Ameridose in late 2007 and again in the summer of 2008. By that time the firm was making more than 600 products and counted as customers about 500 hospital pharmacies in 49 states.

Inspectors found that, as with NECC, none of the products Ameridose made were linked to individual prescriptions. Also, Ameridose was shipping products before receiving test results confirming strength and sterility. FDA took a fentanyl sample for testing and found that it was way too strong. FDA officials immediately asked for a recall.

After reviewing the report, one compliance officer e-mailed her colleague in the District: "This case bothers me. ... Perhaps we should be thinking of getting a health hazard evaluation and getting the firm to recall as many of their products as we can. A vast majority of their products are sterile injectable opioids. Super potency is a serious concern."

"We have a history with this firm," wrote Michael Levy, director of the FDA's Office of Compliance, in another e-mail. "Maybe it's time for reinspection and possible follow-up enforcement action?" Nothing happened.

The hits kept coming. In 2009, FDA received an anonymous e-mail from a company informant: "(When) the FDA came to Ameridose for an inspectionthe company performed illegal and unethical actions. They directed the testing facilities they use to change reports, based on the drug results. They forged documents, forced employees to direct others to do so." The informant implicated Greg Conigliaro.

In 2010, an Ameridose pharmacist warned FDA of contamination issues. He said in a recent batch of succinylcholine, particulates including "angel hair" and pieces of the bag itself appeared in the solution. He said that the quality assurance program had been downsized and deprioritized. He said the Ameridose sales team was "assisting in labeling operations in a clean room" and that 1 of the 3 clean rooms had tested positive for mold. He said Ameridose rigged tests by cleaning the area first, then taking environmental samples. He said "when packages are dropped on the floor, employees are told to pick up and ship" and that bubble wrap is stored on the floor of a room that is "dirty and never cleaned."

During the same period, FDA received a report about a nurse administering half of a syringe of dextrose 50% made by Ameridose to a patient before noticing "a white precipitate below the rubber plunger."

In February 2011, during a shortage of sodium chloride, a pharmacist complained about "great concerns over the safety" of Ameridose NaCl. The "drug is filled into an empty Hospira bag. This bag can be directly attached to any IV line and infused undiluted into a patient. The warning says 'May need to dilute'. There is no circumstance where this product would not need to be diluted prior to infusion. ... As a practicing pharmacist, I'm shocked that such a product would be allowed to be distributed."

In a February 2011 e-mail, an FDA official agreed. The NaCl is "extremely dangerous. ... How is Ameridose even obtaining these empty Hospira 100mg bags? The way that these bags appear and are labeled is very misleading ... and to say that 'Caution Concentration: may need dilute' is an understatement. ... This is unbelievable!"

Early in 2012, FDA received more reports.

• Confusing labeling on Ameridose fentanyl resulted in 2 near misses where nurses had "almost given their patients 100mcg instead of 50mcg."
• A doctor put a patient on a heparin drip, then sent out for labs. The patient's level didn't change. Upping the drip did nothing. Changing the bag didn't help. When the pharmacy tested the 2 bags, neither contained any heparin.
• Health professionals complained about the potency of pain medications made by Ameridose. FDA asked the company to investigate. It never did.

The FDA did nothing more with the info. "FDA officials reacted as though Ameri ?dose was a nuisance it could not figure out how to resolve, rather than a ticking time bomb," charges a report from the House Committee on Energy and Commerce.

Director of Compliance Mutahar Shamsi was furious with FDA's legal department. "[We] spent a lot of time developing this case. ... Having it 'closed' for nebulous reasons is troubling ... [and] frustrating. ... I've told our [Investigations Branch] not to bother inspecting compounding pharmacies if we aren't going to act on the violations."

Douglas Stearn, the director of the Division of Compliance Policy in FDA's Office of Enforcement, was also incensed. "Some of these compounders have serious sterility issues," he wrote in an e-mail, calling it a "central public health issue." FDA's legal team ultimately decided that it could enforce the criteria in section 503A of the 1997 law except in the Ninth Circuit. It finished up the new guidelines in fall 2012.

PHYLLIS AND BILL BRIGGS The hallucinations were so bad, "my husband would have to hold me down at night."

Eight days after getting an injection to help relieve the chronic discomfort in her right hip, Phyllis Briggs was dancing at her granddaughter's wedding. Four days after that, she woke up with the most excruciating pain she'd ever felt.

"I was frantic — I couldn't move my body to get out of bed," says Ms. Briggs, now 77. After 3 days of almost unbearable pain, she finally decided she needed to go to the hospital.

The massive New England Compounding Center (NECC) scandal that was about to unfold was still completely unknown, so after 5 days of treatment with steroids, she was released. "But I didn't get any better," she says. "The headaches were so bad, and I was terribly light-sensitive. We didn't know what was going on."

Eventually, after several patients showed up at the same hospital with similar symptoms, and reports about NECC began to surface, her doctor suggested she come back for additional tests. "I began to hear words I'd never heard before," she says. "What's this about meningitis?"

In the odyssey that followed, she spent a week in the ICU and a total of 33 days in the hospital, during which she also caught pneumonia. Her family had to celebrate Thanksgiving without her. "I felt like my life had been taken from me," she says. "I was an active 73. I had been doing yard work. I was dancing at my granddaughter's wedding. And now I'm just lying there, not able to get up and go to the bathroom without help."

Finally back home in Traverse City, Mich., she endured a year and a half of side effects caused by the antifungal Vfend (voriconazole), a powerful antifungal used to treat serious, invasive fungal infections. "I had terrible hallucinations," she says. "My husband would have to hold me down at night."

And now? "I feel like right now I'm just finally getting back to where I was 4 years ago," she says.

— Jim Burger

Rich and famous
While the FDA stewed, the Caddens and Conigliaros were living the good life. In 2005, Barry and Lisa built a $1.8 million home in Wrentham, Mass. Later they bought a beach home in North Kingston, R.I. Mr. Cadden bought a $90,000 boat in 2010 and a sporty red BMW M3 for $80,000 in 2011. In April 2012, the Caddens treated themselves to a $15,000 first-class vacation to San Diego's ritzy Hotel Del Coronado. Between 2010 and 2012, Mr. Cadden raked in $62 million from NECC and Ameridose, according to FBI testimony.

In 2010, Greg bought a stunning 6-bedroom house in Southborough, Mass., complete with indoor swimming pool and tennis court, for $3.5 million. He and his wife, Cynthia, already owned a $2.35 million waterfront property and another $700,000 property in Cape Cod. Later, Greg hosted a fundraising event at his mansion for Senator Scott Brown (R-Mass). Former Sen. Brown ended up donating the $10,000 he received from NECC employees to the Meningitis Foundation of America.

Doug and Carla Conigliaro, already the owners of a $2.4 million house in Dedham, Mass., bought a $1.2 million condo in Winter Park, Fla., in 2005. Between 2010 and 2012, Carla Conigliaro received nearly $18 million in distributions from NECC. They bought a $4.2 million townhouse in Boston's tony Back Bay area early in 2012.

Business as usual
Back at NECC, it was getting busy. The pressure was on to crank out the shipments, even if it meant cutting corners and covering those cut corners up.

In 2011, an NECC salesman told staffers, "Oh, I got a bunch of stuff coming for you guys. You guys are gonna be busy. I'm gonna keep you guys moving," pharmacy tech Scott Connolly told the TV newsmagazine 60 Minutes. "And that just meant compound it, process it, get it out the door."

Mr. Connolly said the output increased exponentially. "We became a manufacturer overnight ... trying to manufacture without the oversight of a manufacturer."

A version of the events that followed can be found in a 2014 grand jury indictment (it's important to note that all the defendants have pleaded not guilty.)

Sometime in 2011, NECC found it was having a documentation problem. Customers were refusing to provide prescriptions for the medications they were ordering. Perturbed, Mr. Cadden wrote director of sales Rob Ronzio: "Unfortunately we are a 'pharmacy' ... how can you get medication from a pharmacy without a prescription which must contain a patient name. We must connect the patients to the dosage forms at some point in the process to prove that we are not a [manufacturer]. They can follow up each month with a roster of actual patients and we can backfill. If we just sell drugs we are a [manufacturer]."

According to the indictment, NECC's solution was to fill in phony names. For patients in a facility in San Marcos, Texas, NECC used "Big Baby Jesus, Hugh Jass, Freddie Mac and Fannie Mae." For a facility in Lincoln, Neb.: "Lisa Kudrow, David Spade, Matthew Perry, Roy Rogers, Alec Baldwin, Diana Ross, Michael Jackson, Robert Redford and Freddie Mercury." For one in Elkhart, Indiana: "L.L. Bean, Filet-O-Fish, Rug Doctor and Squeaky Wheel."

In 2011, an MSM sales representative e-mailed Mr. Cadden: "Current customer since 05' [sic] ordering $7,200 a month in methylprednisolone. They refuse to provide names and have not since they began ordering with us. ... Is it ok to process without names?" Mr. Cadden's reply: "Yes. ... OK."

According to the indictment, the company found it could use expired raw compounds and just falsify the expiration dates for the log. In December 2011, Mr. Cadden e-mailed supervisory pharmacist Glenn Chin to find out how much methotrexate was on hand. The answer: 1.25 kilograms, but it had expired 4 years ago. No problem. Mr. Chin explained that he would add less fluid to the powder to make up for the lack of potency.

The required autoclaving time for each batch of drugs was a minimum of 20 minutes, according to NECC's own worksheets and USP-797. But that took too long for NECC staffers, who shortened the time to 15 to 17 minutes, the indictment says. The group never bothered to validate this shorter time with a biologic indicator. Observers suggested a possible reason for the foreshortened autoclaving — it might have allowed for the processing of 2 additional batches per day.

Although USP-797 guidelines mandated that at least 20 vials be sent for sterility testing from each batch, NECC sent out only one, regardless of the size of the batch. For a test to detect contamination with 95% confidence, 18% of each batch would need to be tested. At least for some batches, NECC was testing 0.01%, according to the indictment. The company sometimes also didn't bother to wait until the sterility results came back before sending out vials to customers. In the summer of 2012, according to FBI testimony, NECC shipped 150 20 ml syringes of bacitracin to Good Shepherd Hospital in Barrington Ill. On the same day, the company sent a 3 ml sample to the testing lab. Two weeks later, the results came back: not sterile.

NECC was so busy it couldn't stop to clean and disinfect the clean rooms. According to legal documents, Mr. Chin, who supervised Clean Room 1, told techs to focus on production rather than cleaning and disinfecting. He also instructed them to falsely complete logs showing that the rooms had been cleaned and disinfected.

The cleaning service also apparently was ineffective. According to FBI testimony, in an e-mail to the cleaning service in February 2012, Mr. Cadden wrote "We happened to test the same day, Thursday, 2/23, that your crew cleaned our clean rooms last week. The tests from this day showed more mold on 5 to 6 floor areas than we have ever seen before in any 3-month period."

According to FBI testimony, another "fungal bloom" was found in June. Two employees tested positive for bacteria on their hands. Ten bacteria colonies were found on one wall and 3 on another. Twelve colonies of bacteria resided on a shopping cart handle. There were 13 blooms of fungus on one area of the floor and 15 on another.

Beginning in January 2012, NECC's surface and air sampling of the Clean Room 1 suite of rooms produced alarming results. The air, the surfaces and samples of the glove fingertips of compounding personnel and even the gloves in the glove box cultured positive for bacteria and mold. The results would persist for 37 weeks. NECC never investigated and never stopped production.

According to the indictment, in May the Massachusetts Board of Pharmacy once again launched an investigation. NECC had made a hyaluronidase-lidocaine preparation for the famed Massachusetts Eye and Ear Infirmary for retrobulbar blocks during cataract surgery. Unfortunately, the medication contained little or no anesthetic, so patients experienced intense pain. Now the Board was asking NECC for the individual patient prescriptions. In a panicked e-mail to Greg, Mr. Cadden wrote that all the syringes were dispensed without a prescription. Greg wrote back, instructing Mr. Cadden to "call [Mass Eye and Ear] and ask nonchalantly for a patient roster for the 170 syringes and ask where all the rest of the syringes are." Mr. Cadden: "I will try but unless she is dumb she will smell a skunk."

Mr. Cadden e-mailed Greg a prescription template and a list of patients the hospital had identified. Greg told his staff to make 300 fraudulent prescriptions. Mr. Cadden submitted them to the pharmacy board, describing them as "300 patient-specific ... prescriptions ... retained per NECC's standard operating procedure."

That May, the indictment says, in infected Clean Room 1, Mr. Chin mixed up 12.5 liters of preservative-free methylprednisolone acetate 80 mg/ml. He autoclaved it for 15 minutes and 4 seconds, without a biologic indicator. Mr. Chin then sent a 5 ml vial to an independent lab for testing. In early June, the lab sent back a report indicating the sample was sterile. Mr. Chin repeated the process in late June and early August with 2 more lots, yielding almost 10,000 more vials. The Massachusetts Board of Pharmacy projected that the 17,676 total doses were distributed to more than 14,000 patients in 23 states. Only 3,000 doses were quarantined or returned through recall. NECC would send more than 5,000 of the vials to 9 surgery centers in 7 states.

TRACI MACCOUX, 25, is in nearly constant pain because of the tainted steroid injection she was given.

Traci Maccoux has always been an athlete and a fighter. At 11, she was a nationally ranked swimmer who excelled in the freestyle sprint events. Diagnosed at 12 with reflex sympathetic dystrophy (RSD), she fought through the intermittent searing pain, got help controlling it and continued to swim competitively.

Now 25, with the pain unable to be controlled, Traci and her parents, who live in Brooklyn Park, Minn., are dealing with a life of uncertainty. It's been nearly 4 years since she got a tainted steroid injection at Medical Advanced Pain Specialists in neighboring Maple Grove. When the meningitis diagnosis was confirmed, doctors told her they'd have to remove the spacer for an implanted spinal cord stimulator that helped block the RSD-associated pain, or the infection could never be controlled. "We begged them not to take it out, and I understand why they did," says Cathy Maccoux, her mother, "but we knew it was going to make a big impact on her life."

A year of misery followed. Traci was treated with Vfend (voriconazole), a powerful antifungal with debilitating side effects. "It was horrible for a 21-year-old to have to take it, and horrible for us to make her take it," says Cathy. She required constant care. And Cathy and her husband, Dan, are still struggling to pay a mountain of medical bills. They suspect that the ongoing NECC bankruptcy proceedings will net little for most of the victims.

In a big step forward, Traci is now able to help coach kids part-time for a local swimming club. But there's still much uncertainty. "That's the most frustrating thing," says Cathy. "No one can tell us how the medication she took will affect her in the long run. We don't know how it will affect her children, if she has them.

"All these people had to suffer and die for somebody's greed. But you can't let it get to you, because it would eat you up," she adds, before pausing to end on a bright note: "Besides, we're one of the lucky ones. Traci's alive."

— Jim Burger

WIDOWED Joyce Lovelace, who lost her husband, 78-year-old Eddie Lovelace (photo at right) to fungal meningitis, is accompanied by Rep. Edward Whitfield, R-Ky., during testimony before the House Energy Subcommittee on Oversight and Investigations hearing on the fungal meningitis outbreak.

Fungal meningitis
Eddie Lovelace, 78, was the circuit judge for Tennessee counties. He was also a popular Sunday school teacher. In March, 2012, he was involved in a car accident that injured his lumbar and cervical spine. Physical therapy didn't provide enough relief, so he was referred to the St. Thomas Neurosurgical Outpatient Center in Nashville for pain injections. St. Thomas had recently purchased 2,000 vials of contaminated methylprednisone acetate from NECC.

Judge Lovelace received his third injection on Aug. 31. On Sept. 11, his hand felt numb and he had a headache. The next morning, his legs wouldn't work. He was admitted to Vanderbilt Hospital, where, less than a week later, he died. On Sept. 21, the Tennessee Department of Health called the Centers for Disease Control to report the case. An autopsy had confirmed fungus in the central spinal fluid.

Three days later, late in the evening, Tennessee officials notified the Massachusetts Department of Public Health about 5 more fungal meningitis cases. All the patients had received methylprednisone injections compounded by NECC.

Meningitis is an inflammation of the membranes covering the brain and spinal cord. Symptoms include fever, chills, altered mental status, nausea, vomiting, sensitivity to light, severe headache and neck stiffness. Complications include brain damage, subdural effusion, hearing loss, hydrocephalus and seizures. The typical incubation period for infectious meningitis is 1 to 4 weeks after exposure.

In neighboring Virginia, Insight Health of Roanoke had 800 vials of NECC methylprednisone acetate on hand. Pain specialists injected 17 patients with NECC methylprednisone, according to legal documents. According to a lawsuit, one of the patients, Douglas Wingate, received an epidural steroid injection for shoulder pain. Over the next 12 days, he suffered headaches, seizures, strokes and, finally, death.

At the South Bend (Ind.) Clinic, Alice Machowiak received an injection of contaminated steroids. She suffered a severe brain hemorrhage and passed out on her dining room floor. Her nephew came to visit and discovered her body. Her dog was barking and would not leave her side.

SOUND OF SILENCE New England Compounding Center President Barry Cadden told lawmakers at a congressional committee that he would use his Fifth Amendment right to not answer questions in order to avoid self-incrimination.

Ultimately, 64 patients would die and 753 more would be infected. At least some of the patients who survived suffered long-term side effects, including loss of feeling in limbs, hallucinations, intense chronic pain and the risk of organ failures, according to the Centers for Disease Control. According to news reports, one Michigan woman had to be hospitalized 7 times for a total of 75 days. A Florida woman spent 4 months in the hospital.

On Sept. 26, agents from the Massachusetts Department of Public Health raided the NECC offices. According to their report, they found employees scrubbing the compounding areas with bleach, a leaky boiler, vents in the clean room covered with dirt and fuzz, and a metal shelf in the same room covered in a reddish-brown, cloudy substance. There was a greenish-yellow discoloration in one of the autoclaves and condensation in another.

Board and FDA investigators discovered a similar scene at Ameridose: contaminated hoods and rooms, insect infestations, even birds flying through areas where sterile products were packaged and stored. Tubs were positioned to catch rainwater that poured through the roof above the clean rooms. Walls in a room used to prepare sterile drug products were cracked, corroded and covered with a sticky substance. Along with broken glass and foreign material, investigators found a rainbow of colors in and around the sterile hoods: brownish and whitish opaque structures, and thick residues that were orange, brown and green.

According to an FDA report, Ameridose had failed to investigate at least 53 instances of known microbiological contamination. In 2012 alone, 45 microbial and fungal colonies had been found in "critical areas." Ameridose had taken no action.

There'd been at least 29 adverse reports, ranging from low potency to postpartum hemorrhaging to oversedation to respiratory distress. Ameridose had reported none of them, instead classifying them as "patient responses" or "non complaints." The company hadn't tested the potency of its final drug products before releasing them for distribution, despite receiving 33 complaints about lack of effect.

On Sept. 26, at FDA's behest, NECC recalled the 3 suspect lots of MPA. By then, however, about 14,000 doses had been administered. At the Massachusetts pharmacy board's insistence, NECC surrendered its pharmacy license and ceased production. At the end of October, Ameridose also recalled all of its products. By that time it was selling more than 2,200 drugs in syringes and IV bags.

On Oct. 15, FDA issued an advisory that a patient might have acquired fungal meningitis from a different NECC steroid injection, triamcinolone acetonide. In addition, the FDA reported a transplant patient with an Aspergillus fumigatus infection who'd received a NECC cardioplegic solution during surgery.

At a House Committee on Energy and Commerce hearing titled, "The Fungal Meningitis Outbreak: Could It Have Been Prevented?" Mr. Cadden was called to testify. He took the stand but repeatedly took the Fifth. Never once did he apologize or express sorrow.

ARRESTED Glenn Chin, former supervisory pharmacist at the New England Compounding Center, departs federal court in Boston. He was among 14 people from the pharmaceutical company who were arrested.

Belly up
NECC filed for Chapter 11 bankruptcy on Dec. 21, 2012. More than 3,000 people had filed claims and about 686 had filed suits against NECC on the basis that they or their family members were harmed, had died or were otherwise affected by NECC's products. At the time of filing, NECC, which was no longer operating, had only $1.3 million in the books, not even enough to pay the bankruptcy lawyers. In the previous year, as investigations swirled around it, NECC had transferred $21 million to the Conigliaros and Caddens. The Caddens got $6 million, Lisa Conigliaro got almost $9 million, Greg got $1.5 million and Medical Sales Management, run by Doug, got $4.1 million.

They would give that much back, and then some. Chapter 11 Trustee Paul D. Moore negotiated with NECC shareholders and insurers as well as medical providers and their insurers. In the end he submitted a widely praised plan making available $211 million to NECC's creditors. NECC shareholders contributed $47.5 million to the fund. There would also be $21.8 million in tax refunds the shareholders had coming. Insurers for NECC and Ameridose contributed another $35 million. The healthcare providers and their insurers provided the balance.

A criminal investigation begins
At the end of 2012, federal prosecutors convened a grand jury to look into the NECC incident. The body began issuing subpoenas to employees. FBI agents combed through documents and servers at the company, harvesting 2.2 million e-mails and marking significant ones "hot."

On Sept. 4, 2014, Mr. Chin tried to board a plane for Hong Kong with his family. He said he was going to a cousin's wedding. FBI agents arrested and detained him. Three months later, the grand jury investigation complete, attorneys for the U.S. Department of Justice, Consumer Protection Division, unveiled a 131-count criminal indictment. It charged 14 former NECC employees with criminal offenses. It alleged that from 2006 to 2012, NECC knowingly sent out drugs that were mislabeled, unsanitary or contaminated — forming the basis for racketeering charges against 6 individuals.

Messrs. Cadden and Chin were charged with 25 counts of second-degree murder. The trial date had been set for September, but a federal judge has granted a delay until Jan. 5, 2017 (the remaining defendants still face a September trial date).

The indictment asks for the forfeiture of everything that 8 of the employees made between 2006 and 2012. The attorneys say the government is entitled to 2 of the houses Barry and Lisa own, as well as Mr. Cadden's red BMW and sportsfishing boat.

According to several published reports, Mr. Cadden's lawyer, Bruce Singal, complained that prosecutors are trying to turn a "tragic accident" into a federal crime. "Not every accident, and not every tragedy, are caused by criminal conduct," said Mr. Singal in a statement.

Mr. Chin's lawyer, Stephen Weymouth, said he was stunned that prosecutors charged his client with second-degree murder under the racketeering law. "He feels hugely remorseful for everything that's happened — for the injuries and the deaths — but he never intended to cause harm to anybody," said Mr. Weymouth.

Neither lawyer returned calls from Outpatient Surgery seeking comment.

Greg Conigliaro is charged with conspiracy to defraud the United States, a felony. Last year, in a memorandum of law, his attorney argued that the laws regulating compounding pharmacies are "unclear and ambiguous" and so Greg cannot be liable for a conspiracy to defraud the FDA.

Carla and Doug Conigliaro are charged with criminal contempt. The complaint charges that in early 2013, they "willfully and knowingly" transferred $33 million from their bank accounts, even though the bankruptcy judge had barred it. In a legal brief, the couple claims that Carla made a "full and complete" disclosure of her assets to the bankruptcy court, and says that she paid $24 million into the bankruptcy fund, more than the litigants could have recovered from her at trial. The transfers were between accounts owned by the Conigliaros, and were not an attempt to hide assets, the brief says. Their case is scheduled to be tried next month.

Congress swings into action
In 2013, U.S. Rep. Fred Upton (R-Mich) introduced the Drug Quality and Security Act. In the NECC outbreak, Michigan suffered 19 deaths, the most of any state. The bill sailed through Congress and President Obama signed it into law on Nov. 27, 2013. The new law amends the old section 503A to remove the unconstitutional advertising and promotion provisions. "503A" pharmacies are still legal, and regulated by the state pharmacy boards, not FDA, but they have to be making individual Rx's for individual patients and have valid prescriptions to show for it.

It also lets compounding pharmacies register as "503B" facilities. These facilities choose to be regulated by FDA. They are allowed to make drugs that are "essentially a copy" of currently FDA-approved drugs as long as they appear on the FDA's drug shortage list. They cannot make drugs that have been withdrawn from the market for safety reasons. They don't need individual Rx's for patients. But they must comply with the FDA's Current Good Manufacturing Processes, minimum requirements that all drug makers must meet to assure that the products are high quality. They are also subject to FDA inspection, and there are rigid reporting requirements.

Far from over
NECC and Ameridose are closed, and all the principals have surrendered their pharmacy licenses. Experts praise the Drug Quality and Security Act (DQSA), but they say the problems with compounding labs aren't over.

Even without the NECC disaster, compounded pharmaceuticals have had a less-than-stellar track record. Between 2001 and 2011, FDA documented at least 25 deaths and 36 serious injuries linked to large-scale drug compounders, including 13 deaths in 2011 alone. A separate accounting of problems linked to compounders between 1988 and 2005 reveals at least 38 deaths and 210 injuries from contaminated, mislabeled or superpotent drugs.

In the first year after the NECC outbreak, at least 10 companies recalled compounded drugs, and at least 11 companies were ordered to stop producing some or all drugs, according to the Senate Committee on Health. At least 48 pharmacies were found by FDA or state regulators to be producing drugs that were contaminate