By Liz Kowalczyk and Todd Wallack, Globe Staff · By Liz Kowalczyk and Todd Wallack, Globe Staff In February 2003, 11 federal and state health regulators gathered around a ... December

By Liz Kowalczyk and Todd Wallack, Globe Staff

In February 2003, 11 federal and state health regulators gathered around a conference table in Boston, joined by three colleagues patched in on telemonitors from Washington, to decide the fate of New England Compounding Center.

The tiny Massachusetts pharmacy seemed too obscure to require so much firepower. But at least four patients had recently died of meningitis caused by contaminated steroid injections made by compounding pharmacies in California and South Carolina, and federal investigators were worried they could have another public health crisis on their hands, according to documents provided by a US Senate committee and the US Food and Drug Administration.

Similar steroids mixed by New England Compounding were believed to contain toxins — they had possibly sickened at least four patients. And the company was expanding — fast. Despite initially promising to sell medicines only to Massachusetts doctors, co-owner Barry Cadden had acquired pharmacy licenses in at least 13 states, filed applications in many more, and begun to hire a sales force to exploit the burgeoning and profitable market for custom-made drugs.

Before the group of regulators disbanded, they decided the state, not the FDA, would take the lead in disciplining the specialty pharmacy. That proved to be a key choice. California and South Carolina regulators took strong steps that cost the compounders involved in the earlier contamination cases their businesses.

But Massachusetts ultimately would take no significant action against New England Compounding, the company that a decade later is blamed for a national meningitis outbreak that has sickened 541 people and killed 36 — allowing it to flourish into a national distributor of thousands of steroids, painkillers, and other medicines to doctors and hospitals.

“Barry owned the market of pain management,” said Jim Nahill, who owns Pallimed Pharmacy in Woburn.

The Massachusetts pharmacy board did not take action against New England Compounding until October of this year. It forced the pharmacy to shut down after investigators traced the meningitis outbreak to one of its drugs — methylprednisolone acetate — one of the two steroids believed to have sickened patients in 2002. Was retail pharmacist

Before Cadden started New England Compounding, he was a traditional retail pharmacist at a Rhode Island Walgreens store for eight years, with no experience managing a business. In his 1998 application for a Massachusetts pharmacy license, Cadden said he planned to customize drugs for Massachusetts doctors, particularly those in the suburbs west of Boston.

The Framingham pharmacy was located in the same red brick complex as a recycling business owned by his wife’s family, the Conigliaros, who helped him start New England Compounding.

Right away, Cadden struck others compounders, who tend to share recipes, as reticent — almost like he wanted to fly under the radar.

December 9, 2012

“They were still setting up when I knocked on the door,” recalled Dennis Katz, the owner of Hopkinton Drug, a compounding pharmacy 15 minutes away from New England Compounding. “I said, ‘Welcome to the area. If I can help you with a formula, let me know.’ I was not invited in, which I thought was weird.”

New England Compounding was among dozens of independent pharmacies that eagerly began compounding around then, as chain drugstores and Internet mail order outfits threatened small pharmacies by taking over much of the business of filling traditional prescriptions. Insurers were also clamping down on payments, and by the early 2000s, the number of independent pharmacies in the United States had plunged to 23,000 from 40,000 in 1980.

There was also a desire among doctors and patients to more aggressively treat pain, with doses and drug combinations not supplied by big pharmaceutical companies. Patients wanted natural hormone replacement therapies, anti-aging formulas, and veterinary drugs. Consultants and compounders boasted that impossibly large profits could be made.

“Anybody know what the average margin on a compounded product is?” businessman Mickey Letson, then president of a major compounding supply company, asked a group at a national trade show in Atlanta in 2002. “Seventy-five percent minimum gross profits. Depending on what field you’re in it can run into the thousands of percent.”

Lester Nathan of Schenectady, N.Y., who dubbed himself the “million dollar marketing coach,” helped over 300 pharmacies market their compounded products. “The raw materials are cheap and the pharmacist is getting paid for a higher level of product,” Nathan said in an interview. “Compounding is one of the areas they should have been in anyway, in order to serve their patients better because it’s customizing medicine.”

A Texas-based company called Professional Compounding Centers of America, started by a Houston pharmacist in 1981, received a growing number of calls from traditional pharmacists who wanted to learn to custom make drugs. The company mailed kits that included formulas, chemicals, and equipment. Customers included New England Compounding, which bought nonsterilized chemical powder to mix into sterile injectable drugs, the riskiest, most demanding form of compounding.

By 2002, the year the FDA started investigating the firm, it was clear that New England Compounding’s strategy went far beyond the local focus Cadden had promised. Yet state and federal regulators did next to nothing to slow its growth.

That year, the pharmacy took over a neighboring store to double its space. Cadden proudly told federal regulators he planned to sell drugs in all 50 states. And pharmacy boards — apparently largely unaware of the company’s tussles with regulators — cooperated, quickly granting New England Compounding licenses.

A10 B o s t o n S u n d a y G l o b e D E C E M B E R 9 , 2 0 1 2

expanding — fast. Despite ini-tially promising to sell medi-cines only to Massachusettsdoc tors , co -owner Barr yCadden had acquired pharma-cy licenses in at least 13 states,filed applications in manymore, and begun to hire a salesforce to exploit the burgeoningand profitable market for cus-tom-made drugs.

Before the group of regula-tors disbanded, they decidedthe state, not the FDA, wouldtake the lead in disciplining thespecialty pharmacy. Thatproved to be a key choice. Cali-fornia and South Carolina regu-lators took strong steps thatcost the compounders involvedin the earlier contaminationcases their businesses.

But Massachusetts ultimate-ly would take no significantaction against New EnglandCompounding, the companythat a decade later is blamedfor a national meningitis out-break that has sickened 541people and killed 36 — allow-ing it to flourish into a nationaldistributor of thousands of ste-roids, painkillers, and othermedicines to doctors and hos-pitals.

“Barry owned the market ofpain management,’’ said JimNahill, who owns PallimedPharmacy in Woburn.

The Massachusetts pharma-cy board did not take actionagainst New England Com-pounding until October of thisyear. It forced the pharmacy toshut down after investigatorstraced the meningitis outbreakto one of its drugs — methyl-prednisolone acetate — one ofthe two steroids believed tohave sickened patients in 2002.

Was retail pharmacistBefore Cadden started New

England Compounding, he wasa traditional retail pharmacistat a Rhode Island Walgreensstore for eight years, with noexperience managing a busi-ness. In his 1998 applicationfor a Massachusetts pharmacyl i c e n s e , C a d d e n s a i d h eplanned to customize drugs forMassachusetts doctors, partic-ularly those in the suburbs westof Boston.

The Framingham pharmacywas located in the same redbrick complex as a recyclingbusiness owned by his wife’sfamily, the Conigliaros, whohelped him start New EnglandCompounding.

Right away, Cadden struckothers compounders, who tendto share recipes, as reticent —almost like he wanted to flyunder the radar.

“They were still setting upwhen I knocked on the door,’’recalled Dennis Katz, the own-er of Hopkinton Drug, a com-pounding pharmacy 15 min-utes away from New EnglandCompounding. “I said, ‘Wel-come to the area. If I can helpyou with a formula, let meknow.’ I was not invited in,which I thought was weird.’’

New England Compoundingwas among dozens of indepen-dent pharmacies that eagerlybegan compounding aroundthen, as chain drugstores andInternet mail order outfitsthreatened small pharmaciesby taking over much of thebusiness of filling traditionalprescriptions. Insurers werealso clamping down on pay-

!PHARMACYContinued from Page A1

ments, and by the early 2000s,the number of independentpharmacies in the UnitedStates had plunged to 23,000from 40,000 in 1980.

There was also a desireamong doctors and patients tomore aggressively treat pain,with doses and drug combina-tions not supplied by big phar-maceutical companies. Patientswanted natural hormone re-placement therapies, anti-ag-ing formulas, and veterinarydrugs. Consultants and com-pounders boasted that impossi-bly large profits could be made.

“Anybody know what the av-erage margin on a compound-ed product is?’’ businessmanMickey Letson, then presidentof a major compounding sup-ply company, asked a group at anational trade show in Atlantain 2002. “Seventy-five percentminimum gross profits. De-pending on what field you’re init can run into the thousands ofpercent.’’

Lester Nathan of Schenec-tady, N.Y., who dubbed himselfthe “million dollar marketingcoach,’’ helped over 300 phar-macies market their com-pounded products. “The rawmaterials are cheap and thepharmacist is getting paid for ahigher level of product,’’ Na-than said in an interview.“Compounding is one of the ar-eas they should have been inanyway, in order to serve theirpatients better because it’s cus-tomizing medicine.’’

A Texas-based companycalled Professional Compound-ing Centers of America, startedby a Houston pharmacist in1981, received a growing num-ber of calls from traditionalpharmacists who wanted tolearn to custom make drugs.The company mailed kits thatincluded formulas, chemicals,

and equipment. Customers in-cluded New England Com-pounding, which bought non-sterilized chemical powder tomix into sterile injectabledrugs, the riskiest, most de-manding form of compound-ing.

By 2002, the year the FDAstarted investigating the firm, itwas clear that New EnglandCompounding’s strategy wentfar beyond the local focus Cad-den had promised. Yet stateand federal regulators did nextto nothing to slow its growth.

That year, the pharmacytook over a neighboring storeto double its space. Caddenproudly told federal regulatorshe planned to sell drugs in all50 states . And pharmacyboards — apparently largelyunaware of the company’s tus-sles with regulators — cooper-ated, quickly granting NewEngland Compounding licens-es.

In one instance, CharlesYoung, then executive directorof the Massachusetts pharmacyboard, assured his counterpartsin Florida that the pharmacywas in “good standing.’’ Youngdated the letter April 10, 2002— the same day FDA and boardinvestigators arrived at thepharmacy to investigate poten-tial contamination of the ste-roid betamethasone and foundCadden refusing to provide re-cords.

During these years, the com-pany marketed its products ag-gressively, borrowing tech-niques from large drug manu-facturers. Cadden set up anexhibit booth at a nationalmeeting of eye doctors in 2003,faxed fliers to doctors’ offices in2004 advertising fast-acting“extra strength triple anesthet-ic cream,’’ and cosponsored theEastern Pain Association meet-

ing in Manhattan in 2005.In promotional materials

faxed to doctors’ offices anddistributed at national meet-ings, the company promoted itsrigorous sterility testing and at-tention to industry standards.One 2005 pamphlet boastedthe company was licensed in 49states, included a “state-of-the-art laboratory,” and used an in-dependent testing firm.

Doctors say Cadden some-times shipped large amounts ofdrugs to them on consignment,requiring them to fax patientnames only as each dose wasused. It is a more convenientsystem for physicians than pro-viding a prescription before re-ceiving each vial — as requiredby Massachusetts law.

“When you are good at whatyou do in our business, you cre-ate waves of business you can’tpredict,’’ said Nahill, the Wo-burn compounder. It’s a com-petitive business, he added,and if a compounder isn’t re-sponsive to doctors’ needs,“they will go somewhere else.’’

Cadden’s company got in-valuable help along the wayfrom his brother-in-law, a Flori-da anesthesiologist with con-tacts among fellow pain spe-cialists and years of experienceusing compounded pain drugs.

Dr. Douglas Conigliaro,whose wife, Carla, was listed asthe pharmacy’s majority owner,started a marketing companyin 2002 that promoted New

England Compounding’s prod-ucts. And he introduced Cad-den to a Florida pharmacistwho had long supplied Conigli-aro with compounded medi-cines.

“I think Doug wished Barrywould do a little more volume,’’said Sam Pratt, recalling thatConigliaro was interested inhow many prescriptions hemixed per day. The men talkedin 2005 at a Florida pharmacyconference, where Cadden wasin high demand. Pratt said Cad-den answered constant cell-phone calls as they walked theconvention floor.

Conigliaro has not respond-ed to request for comment.Cadden has declined to com-ment through his attorney.

W h i l e C o n i g l i a r o w a sviewed by workers as an ag-gressive businessman, Caddenwas friendly, they said. One for-mer salesman, who did notwant to be identified becausehe is afraid of damaging his ca-reer, said Cadden was “very dy-namic” and loved talking abouthis compounding work. Duringhis job interview, he estimatedCadden talked for 43 of the 45minutes.

Beneath Cadden’s outgoingpersonality, however, he had acompetitive nature.

Several years after they metin Florida, Pratt decided to callCadden for a favor. He wantedto know how to make a certainmedication, but Cadden was

tight-lipped. “He said if he wasgoing to do it for anyone, he’ddo it for me,’’ Pratt recalled. “Hewouldn't tell me. It was hismarket.’’

Sometimes uncooperativeCadden was similarly cir-

cumspect when FDA inspectorsvisited New England Com-pounding to investigate reportsthat several patients had devel-oped meningitis-like symptomsafter injections with the com-pany’s drugs. He chafed andsometimes turned uncoopera-tive, according to internal agen-cy reports.

One day in April 2002, in-spectors noted that Cadden hadstored a 1,000-milliliter beakerof betamethasone — the steroidbelieved to have sickened atleast two patients — in a pro-tective hood while awaiting re-sults of sterility tests, whichcould take a week. Cadden hadcovered the beaker with severalsheets of aluminum foil.

Investigators warned the so-lution could become contami-nated sitting out that long, butCadden said he did not want“to waste money” on vials untilhe knew the product was sterileand could be sold. At a meetinga week later, Cadden told inves-tigators the beaker did not con-tain betamethasone at all.

Federal and state officials in-spected New England Com-pounding nine times in 2002and 2003, and the FDA issuedthe pharmacy two form 483s —a formal list of concerns ob-served during inspections —identifying problems with thesterilization and mixing ofdrugs.

In response to one, Caddensaid he had hired a consultantand taken a series of correctiveactions, including sanitizing

Continued on next page

SOURCES: FDA, Mass. Pharmacy Board, CDC LIZ KOWALCZYK, PATRICK GARVIN/GLOBE STAFF

Feb./May ’03:NECC co-ownerBarry Caddentells FDA he’shired aconsultant andmadeimprovements.

Jan. ’07: Caddenstrongly objects toFDA warning, sayingtoo much time haspassed sinceinspections.

May ’11: Pharmacyboard inspection forNECC expansion is“satisfactory.”

Sept. ’12: Tennesseehealth departmentnotifies Centers forDisease Control andPrevention of first case offungal meningitis in apatient who received aninjection of NECC’smethylprednisolone.

Dec. ’12: 541 peoplesickened, including 36who have died.

Oct. ’12: FDA and CDCrecommend all healthcare providersimmediately stop usingNECC products for fearthey are contaminatedwith fungus.

April ’04: Family of William Koch,who died of meningitis afterreceiving a contaminated steroidinjection in 2002, sues NECC.Case later settled.

Oct. ’04: Board drafts consentagreement requiring three yearsprobation and reprimand forNECC and Cadden.

Nov. ’04: Cadden’s lawyerobjects to disciplinary action,says it could destroy NECC, whichis now licensed in 43 states.

Jan. ’06: Consent agreementgoes into effect with noreprimand and one yearprobation, which is stayed.

June ’06: Pharmacy board tellsCadden that NECC hassuccessfully completed theterms of the consent agreementand improved procedures.

July ’06: Cadden and his familystart a new drug-distributionbusiness focused on hospitals,Ameridose.

Dec. ’06: FDA warning lettersent to Cadden about seriousproblems found during pastinspections.

Feb. ’03: FDA tellspharmacy board it isworried about“serious publichealthconsequences’’from NECC’s “poorcompoundingpractices.”

Oct. ’08: FDAissues final letter toCadden. Threatensthe pharmacy withfuture action, butnever followsthrough, untilrecent meningitisoutbreak.

Sept. ’04: FDA and statepharmacy board inspect NECCfor compounding unapproveddrug, among other allegations.State issues advisory letters toCadden involving complaints forallegedly improperly solicitingprescriptions out of state. Boardrequires company to makequality improvements, butissues no discipline.

April ’02: The FDAand state launchinspection, findpoor sterilityprocedures.

Aug. ’02: New FDAand state inspectiondiscovers moreproblems.

April ’02: At least twopatients sickened; NECCsteroid,betamethasone,suspected.

July ’02: At least twopatients sickened;another NECC steroid,methylprednisolone,suspected. NECCexpands, hiresmarketing staff, andbecomes licensed inConnecticut and Florida.

FDA INVOLVEMENT

NECCNew England Compounding Center’s history

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

NATHANIEL BROOKS FOR THE BOSTON GLOBE

Lester Nathan has helped more than 300 pharmaciesmarket their compounding products.

Pharmacy grew as regulators debated action

DAVID L. RYAN/GLOBE STAFF

New England Compounding was located in the same Framingham complex as a business owned by his wife’s family.

































































FDA INVOLVEMENT


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012






December 9, 2012

In one instance, Charles Young, then executive director of the Massachusetts pharmacy board, assured his counterparts in Florida that the pharmacy was in “good standing.” Young dated the letter April 10, 2002 — the same day FDA and board investigators arrived at the pharmacy to investigate potential contamination of the steroid betamethasone and found Cadden refusing to provide records.

During these years, the company marketed its products aggressively, borrowing techniques from large drug manufacturers. Cadden set up an exhibit booth at a national meeting of eye doctors in 2003, faxed fliers to doctors’ offices in 2004 advertising fast-acting “extra strength triple anesthetic cream,” and cosponsored the Eastern Pain Association meeting in Manhattan in 2005.

In promotional materials faxed to doctors’ offices and distributed at national meetings, the company promoted its rigorous sterility testing and attention to industry standards. One 2005 pamphlet boasted the company was licensed in 49 states, included a “state-of-the-art laboratory,” and used an independent testing firm.

Doctors say Cadden sometimes shipped large amounts of drugs to them on consignment, requiring them to fax patient names only as each dose was used. It is a more convenient system for physicians than providing a prescription before receiving each vial — as required by Massachusetts law.

“When you are good at what you do in our business, you create waves of business you can’t predict,” said Nahill, the Woburn compounder. It’s a competitive business, he added, and if a compounder isn’t responsive to doctors’ needs, “they will go somewhere else.”

Cadden’s company got invaluable help along the way from his brother-in-law, a Florida anesthesiologist with contacts among fellow pain specialists and years of experience using compounded pain drugs.

Dr. Douglas Conigliaro, whose wife, Carla, was listed as the pharmacy’s majority owner, started a marketing company in 2002 that promoted New England Compounding’s products. And he introduced Cadden to a Florida pharmacist who had long supplied Conigliaro with compounded medicines.

“I think Doug wished Barry would do a little more volume,” said Sam Pratt, recalling that Conigliaro was interested in how many prescriptions he mixed per day. The men talked in 2005 at a Florida pharmacy conference, where Cadden was in high demand. Pratt said Cadden answered constant cellphone calls as they walked the convention floor.

Conigliaro has not responded to request for comment. Cadden has declined to comment through his attorney.

While Conigliaro was viewed by workers as an aggressive businessman, Cadden was friendly, they said. One former salesman, who did not want to be identified because he is afraid of damaging his career, said Cadden was “very dynamic” and loved talking about his compounding work. During his job interview, he estimated Cadden talked for 43 of the 45 minutes.

Beneath Cadden’s outgoing personality, however, he had a competitive nature. Several years after they met in Florida, Pratt decided to call Cadden for a favor.

He wanted to know how to make a certain medication, but Cadden was tight-lipped. “He said if he was going to do it for anyone, he’d do it for me,” Pratt recalled. “He wouldn't tell me. It was his market.” Sometimes uncooperative

Cadden was similarly circumspect when FDA inspectors visited New England Compounding to investigate reports that several patients had developed meningitis-like

































































FDA INVOLVEMENT


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012






December 9, 2012

symptoms after injections with the company’s drugs. He chafed and sometimes turned uncooperative, according to internal agency reports.

One day in April 2002, inspectors noted that Cadden had stored a 1,000-milliliter beaker of betamethasone — the steroid believed to have sickened at least two patients — in a protective hood while awaiting results of sterility tests, which could take a week. Cadden had covered the beaker with several sheets of aluminum foil.

Investigators warned the solution could become contaminated sitting out that long, but Cadden said he did not want “to waste money” on vials until he knew the product was sterile and could be sold. At a meeting a week later, Cadden told investigators the beaker did not contain betamethasone at all.

Federal and state officials inspected New England Compounding nine times in 2002 and 2003, and the FDA issued the pharmacy two form 483s — a formal list of concerns observed during inspections — identifying problems with the sterilization and mixing of drugs.

In response to one, Cadden said he had hired a consultant and taken a series of corrective actions, including sanitizing work spaces on a regular schedule and cleaning and testing the autoclave, used for sterilizing equipment.

The investigation occurred amid the unfolding tragedies in California and South Carolina. These cases were a key component of the FDA’s presentation to state pharmacy regulators at the February 2003 meeting.

The agency’s officials wanted to impress on the pharmacy board “the potential for serious public health consequences if NECC’s compounding practices, particularly those relating to sterile products, are not improved,” David Elder, then director of compliance for the agency’s New England office, told the group, according to a memo summarizing the meeting.

Thirteen patients were hospitalized, including five with meningitis, and three died, after receiving injections of the steroid betamethasone made by Doc’s Pharmacy in Walnut Creek, Calif. — cases that came to light in the summer of 2001. In South Carolina the next year, four patients contracted fungal meningitis from methylprednisolone made by Urgent Care in Spartanburg, and at least one died.

During the meeting, the FDA also pointed out that an April 2002 US Supreme Court ruling had weakened its authority over compounding pharmacies, while leaving intact its power to regulate manufacturers.

Though New England Compounding had begun its national expansion by that time, the regulators, for reasons that are unclear, decided the company was still a compounder, and the FDA handed over primary oversight responsibility to the state.

The state pharmacy board initially proposed a three-year probation and reprimand of the company, but backed off when the firm protested that the action would threaten its national business by scaring off customers. Instead, the board signed a consent agreement with the pharmacy in 2006 that required it to improve its sterile compounding procedures.

By that time, William Koch, a patient injected with the pharmacy’s methylprednisolone acetate in 2002 at a Rochester, N.Y., hospital, had died of bacterial meningitis, according to a lawsuit filed against the pharmacy in 2004 and confidentially settled.

Harold Sparr, a Massachusetts pharmacy board member from 1992 to 2006, said board members did not understand what was going on inside New England Compounding. Maybe, he said, the company “let things slide for the almighty buck.”

State health officials now acknowledge they missed opportunities to ensure the pharmacy’s practices were safe and say they have now stepped up enforcement.

Meanwhile, the FDA remained involved, sending New England Compounding an official warning letter in 2006 detailing deficiencies it found during its inspections.

Cadden wrote back in 2007 that the findings were invalid because the letter came so long after the 2002 and

D E C E M B E R 9 , 2 0 1 2 B o s t o n S u n d a y G l o b e A11

work spaces on a regular sched-ule and cleaning and testingthe autoclave, used for steriliz-ing equipment.

The investigation occurredamid the unfolding tragedies inCalifornia and South Carolina.These cases were a key compo-nent of the FDA’s presentationto state pharmacy regulators atthe February 2003 meeting.

The agency’s officials want-ed to impress on the pharmacyboard “the potential for seriouspublic health consequences ifNECC’s compounding practic-es, particularly those relating tosterile products, are not im-proved,’’ David Elder, then di-rector of compliance for theagency’s New England office,told the group, according to amemo summarizing the meet-ing.

Thirteen patients were hos-pitalized, including five withmeningitis, and three died,after receiving injections of thesteroid betamethasone madeby Doc’s Pharmacy in WalnutCreek, Calif. — cases that cameto light in the summer of 2001.In South Carolina the next year,four patients contracted fungalmeningitis from methylpredni-solone made by Urgent Care inSpartanburg, and at least onedied.

During the meeting, theFDA also pointed out that anApril 2002 US Supreme Courtruling had weakened its au-thority over compoundingpharmacies, while leaving in-tact its power to regulate man-ufacturers.

Though New England Com-pounding had begun its nation-al expansion by that time, theregulators, for reasons that areunclear, decided the companywas still a compounder, and theFDA handed over primary over-sight responsibility to the state.

The state pharmacy boardinitially proposed a three-yearprobation and reprimand ofthe company, but backed offwhen the firm protested thatthe action would threaten itsnational business by scaring off

Continued from preceding page

customers. Instead, the boardsigned a consent agreementwith the pharmacy in 2006 thatrequired it to improve its sterilecompounding procedures.

By that time, William Koch,a patient injected with thepharmacy’s methylprednisolo-ne acetate in 2002 at a Roches-ter, N.Y., hospital, had died ofbacterial meningitis, accordingto a lawsuit filed against thepharmacy in 2004 and confi-dentially settled.

Harold Sparr, a Massachu-setts pharmacy board memberfrom 1992 to 2006, said boardmembers did not understandwhat was going on inside NewEngland Compounding. May-be, he said, the company “letthings slide for the almightybuck.’’

State health officials nowacknowledge they missedopportunities to ensure thepharmacy’s practices were safe

and say they have now steppedup enforcement.

Meanwhile, the FDA re-mained involved, sending NewEngland Compounding an offi-cial warning letter in 2006 de-tailing deficiencies it foundduring its inspections.

Cadden wrote back in 2007that the findings were invalidbecause the letter came so longafter the 2002 and 2003 inspec-tions. The FDA sent a final let-ter in 2008 threatening follow-up inspections or even closureof the pharmacy, but nevermade good on those threats.

In response to Globe ques-tions about why Cadden wasuncooperative with the FDAduring the early 2000s, his at-torney said, “This sort of histor-ical retrospective sheds no lighton the current issue.’’

“Whatever alleged condi-tions in the NECC lab may bedredged up from many yearsback simply shed no light onthe mystery of what went soterribly wrong for the first timein June and August, and why,”Bruce Singal said in a writtenstatement.

Undertook big expansionIts problems with the FDA

apparently settled, New Eng-land Compounding embarkedon the largest expansion in itshistory. Cadden and GregoryConigliaro, younger brother toDoug, launched another com-pany, Ameridose, in 2006,which focused on repackagingand custom-making medica-tions for hospitals.

The pharmacy focused onsmall pain and eye clinics, butas a growing number of drugsbecame backlogged, hospitalssigned on as customers and itssales exploded.

One former manager of itssister marketing company saidthat by 2008, New EnglandCompounding was “wildlyprofitable,’’ earning $13 millionin revenue, of which more than$5 million was pretax income.The manager wanted to remainanonymous because he is wor-ried about being sued.

The company grew fromabout 20 employees in 2009 to50 by the time it shut down twomonths ago.

“It was crazy, crazy expan-sion,” said one former sales rep-resentative who did not want tobe identified because he signeda confidentiality agreement.

Another salesman, the onewho did not want to be identi-fied because he was afraid itwould hurt his career, said Cad-den wanted his pharmacy togrow, particularly after watch-ing Ameridose become muchlarger. “He had sort of a love-hate relationship with Ameri-dose.”

But New England Com-pounding benefited from itsties to Ameridose, which fre-quently referred customers toits sister company for productsit couldn’t supply itself.

FDA records for this yearshow that more than threedozen hospitals purchaseddrugs in shipments of 500 dos-es or more — even though Mas-sachusetts law prohibited NewEngland Compounding fromselling drugs without patient-specific prescriptions because itwas not licensed as a manufac-turer.

Gaston Memorial Hospitalin North Carolina purchased900 vials of nalbuphine, a pow-erful painkiller, in July alone.The hospital acknowledged itdid not have individual pre-scriptions for each dose.

Hospital spokeswomanDallas Wilborn said the hospi-tal was forced to buy from thecompany “due to a shortage ofmedications from our tradi-tional suppliers.”

The salesman who signedthe confidentiality agreementsaid hospitals were desperatefor medications in short supply.“They were freaking out,” hesaid. “If they couldn’t get thesedrugs, patients were going todie.”

Liz Kowalczyk can be reachedat [email protected]. ToddWallack can be reached at [email protected].

WASHINGTON — PresidentObama said Saturday that Re-publicans in the House areblocking a bill that would pre-

vent a tax in-crease on thefirst $250,000of income

earned by all Americans.The Democratic-controlled

Senate has approved the mea-sure, but Obama said HouseRepublicans have ‘‘put forwardan unbalanced plan that actu-ally lowers rates for the wealth-iest Americans.’’ Obama sup-ports a plan to raise taxes onfamilies earning more than$250,000.

In his weekly radio and In-ternet address, Obama said‘‘the math just doesn’t work’’on the GOP plan.

Obama’s comments markthe fourth time since his re-election that he has used theradio address to push for mid-dle-class tax cuts as part of aplan to avert a looming fiscalcliff — and his most sharplypartisan tone.

Obama said his plan to raisetaxes on the wealthiest Ameri-cans should come as no sur-prise to Republicans or anyoneelse.

‘‘After all, this was a centralquestion in the election. A clearmajority of Americans — Dem-ocrats, Republicans, and inde-pendents — agreed with a bal-anced approach that askssomething from everyone, buta little more from those whocan most afford it,’’ Obamasaid.

His plan is ‘‘the only way toput our economy on a sustain-able path without asking evenmore from the middle class,’’Obama said. It also is the onlyplan he is willing to sign, thepresident said.

Obama’s comments came asHouse Speaker John Boehnersaid Friday there has been noprogress in negotiations toavert the fiscal cliff, a combina-tion of automatic tax increasesand spending cuts set to takeeffect in January.

Boehner said the WhiteHouse has wasted anotherweek and has failed to respondto a GOP offer to raise tax reve-nues and cut spending. Obamaand Boehner spoke privately byphone on Wednesday. Boehnerdescribed the conversation as

pleasant, ‘‘but just more of thesame.’’

Obama said in his addressthat he stands ready to workwith Republicans on a planthat spurs economic growth,creates jobs, and reduces thenational deficit.

Florida Senator Marco Ru-bio said in the Republican re-sponse Saturday that tax in-creases will not solve the na-tion’s $16 trillion debt. Onlyeconomic growth and reformof entitlement programs willhelp control the debt, Rubiosaid.

ASSOCIATED PRESS

Outgoing Brown cites smallrole in fiscal cliff resolution

Senator Scott Brown saidSaturday he is just “one voteout of 100” and it is up to Presi-dent Obama, House SpeakerJohn Boehner, and top congres-sional leaders to propose solu-tions for avoiding the fiscal cliffat the end of the year.

The Massachusetts Republi-can, who lost a bid for reelec-tion last month, has avoidedpublicly stating where hestands on possible tax increasesor spending cuts that wouldstave off automatic changes inrevenues and expenditures setto take effect Jan. 1.

Brown is set to leave office aday later.

Asked what solutions mightappeal to both Republicans andDemocrats, Brown demurred.

“Well, it’s really up to the

leadership to make that deter-mination. They’re the ones whoare posturing and coming forthwith the solutions right now,”the senator said. “I’m one voteout of 100, and I look forwardto being able to cast that voteto try to solve the problem.”

GLEN JOHNSON

Ex-Republican Crist nowDemocratic Partymember

TALLAHASSEE — Formergovernor Charlie Crist, whowas elected the state’s chief ex-ecutive as a Republican andthen ran unsuccessfully for theUS Senate as an independent,announced on Twitter that heis switching to the DemocraticParty.

The announcement Fridaynight fanned speculation thatCrist would seek to regain hisold job from Republican Gover-nor Rick Scott in 2014.

The Tampa Bay Times re-ported that Crist signed the pa-pers changing his affiliationfrom independent to Democratat a Christmas reception at theWhite House.

He cited the RepublicanParty’s shift to the right on arange of issues, including im-migration, education, and theenvironment.

The 56-year-old Crist spokeat the Democratic NationalConvention in Charlotte, N.C.,that nominated Obama for asecond term and campaignedfor his reelection.

ASSOCIATED PRESS

ObamasaysGOP’s taxmathdoesn’twork

JASON REED/REUTERS

Former Florida governor Charlie Crist’s party changefanned speculation that he may run for governor in 2014.

POLITICALNOTEBOOK

Barry Caddenwrote back to theFood and DrugAdministration in2007 saying thatthe findings wereinvalid because theletter came so longafter the 2002 and2003 inspections.

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December 9, 2012

2003 inspections. The FDA sent a final letter in 2008 threatening follow-up inspections or even closure of the pharmacy, but never made good on those threats.

In response to Globe questions about why Cadden was uncooperative with the FDA during the early 2000s, his attorney said, “This sort of historical retrospective sheds no light on the current issue.”

“Whatever alleged conditions in the NECC lab may be dredged up from many years back simply shed no light on the mystery of what went so terribly wrong for the first time in June and August, and why,” Bruce Singal said in a written statement.

Undertook big expansion

Its problems with the FDA apparently settled, New England Compounding embarked on the largest expansion in its history. Cadden and Gregory Conigliaro, younger brother to Doug, launched another company, Ameridose, in 2006, which focused on repackaging and custom-making medications for hospitals.

The pharmacy focused on small pain and eye clinics, but as a growing number of drugs became backlogged, hospitals signed on as customers and its sales exploded.

One former manager of its sister marketing company said that by 2008, New England Compounding was “wildly profitable,” earning $13 million in revenue, of which more than $5 million was pretax income. The manager wanted to remain anonymous because he is worried about being sued.

The company grew from about 20 employees in 2009 to 50 by the time it shut down two months ago.

“It was crazy, crazy expansion,” said one former sales representative who did not want to be identified because he signed a confidentiality agreement.

Another salesman, the one who did not want to be identified because he was afraid it would hurt his career, said Cadden wanted his pharmacy to grow, particularly after watching Ameridose become much larger. “He had sort of a love-hate relationship with Ameridose.”

But New England Compounding benefited from its ties to Ameridose, which frequently referred customers to its sister company for products it couldn’t supply itself.

FDA records for this year show that more than three dozen hospitals purchased drugs in shipments of 500 doses or more — even though Massachusetts law prohibited New England Compounding from selling drugs without patient-specific prescriptions because it was not licensed as a manufacturer.

Gaston Memorial Hospital in North Carolina purchased 900 vials of nalbuphine, a powerful painkiller, in July alone. The hospital acknowledged it did not have individual prescriptions for each dose.

Hospital spokeswoman Dallas Wilborn said the hospital was forced to buy from the company “due to a shortage of medications from our traditional suppliers.”

The salesman who signed the confidentiality agreement said hospitals were desperate for medications in short supply. “They were freaking out,” he said. “If they couldn’t get these drugs, patients were going to die.” Liz Kowalczyk can be reached at [email protected]. Todd Wallack can be reached

at [email protected].

December 9, 2012

































































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Documents

By Liz Kowalczyk and Todd Wallack, Globe Staff · By Liz Kowalczyk and Todd Wallack, Globe Staff In February 2003, 11 federal and state health regulators gathered around a ... December