By Toni Clarke and Aaron Pressman
BOSTON (Reuters) - The drug-mixing company at the heart of a deadly U.S. meningitis outbreak solicited bulk orders from physicians and failed to require proof of individual patient prescriptions as required under state regulations, emails to a customer show.
Reuters reviewed more than a dozen emails that show the New England Compounding Center, contrary to state rules, sold drugs without requiring physicians to supply individual patient prescriptions.
The customer confirmed that NECC supplied the clinic with drugs without patient names or prescriptions.
NECC, based in Framingham, Massachusetts, distributed thousands of vials of a contaminated steroid that has put 14,000 people at risk of contracting meningitis and killed 15 people.
The emails support assertions made this week by state pharmacy regulators that the compounding firm, which was authorized to deliver products only in response to patient-specific prescriptions, had violated its license in Massachusetts.
The emails also indicate that NECC referred business to a sister company, Ameridose LLC, despite a statement by Ameridose earlier this week that the two operated separately.
Both companies mix, dilute or repackage drugs that may not be easily available through a pharmaceutical manufacturer. They are owned by Gregory Conigliaro, an engineer, and his brother-in-law, Barry Cadden, a pharmacist who was in charge of pharmacy operations at NECC until it surrendered its license in the wake of the meningitis outbreak.
"NECC's intent has always been to operate in compliance with our licenses in the states where we do business, and we have made our best efforts to be in compliance with all governing laws and regulations during 15 years of providing hundreds of thousands of patients with vital medications," NECC said in a statement. "We are cooperating with agencies that have a policy of not commenting on pending investigations, and as part of that cooperation we are honoring that policy and not commenting on specific facts."
Ameridose has closed for 12 days pending state and federal inspections. Regulators say they have not found Ameridose's products to be compromised and they have not requested a recall. Ameridose maintains it is a separate entity from NECC with "distinct operational management."
"Although there is common ownership, the two companies operate under separate registrations and different licensure," Ameridose said on Wednesday through its public relations firm, O'Neill and Associates.
Another company, Alaunus Pharmaceutical LLC, which distributes drugs for Ameridose and also is owned by Conigliaro and Cadden, suspended its operations this week. Regulators said that among other things they would be looking at any "corporate governance" issues related to the outbreak.
In an email dated July 12, NECC regional sales manager David London Barron told NewSouth NeuroSpine, a neurosurgery and pain management clinic in Mississippi, that he had reached out to "our sister company, Ameridose" in connection with a request by the clinic for an anesthetic.
"Richard DeLibertis will be your contact - I have asked him to reach out to you as soon as possible to discuss your options," Barron wrote in the email.
On October 1, DeLibertis, identifying himself in an email as a regional sales manager for Ameridose, told NewSouth NeuroSpine that Ameridose did not currently have the anesthetic in stock but that it would add the clinic "to the list of those seeking the medication."
According to regulations for compounding pharmacies posted on the web site of the Mississippi Board of Pharmacy, a state in which NECC is also licensed, compounding pharmacies must match orders with individual patient prescriptions.
"Pharmacists may compound drugs prior to receiving a valid prescription based on a history of receiving valid prescriptions that have been generated solely within an established pharmacist/patient/practioner relationship, and provided that they maintain the prescriptions on file for all such products compounded at the pharmacy as required by the Mississippi Board of Pharmacy."
Moreover, the regulations read, pharmacists "shall not solicit business by promoting to compound specific drug products (e.g., like a manufacturer.)"
Barron did not respond to telephone or email requests for comment. DeLibertis did not respond to an emailed request for comment. O'Neill and Associates, which represents NECC and Ameridose, declined to comment on behalf of its clients about the emails.
PROMISE OF LOWER COSTS
Michigan, with the second-largest number of cases, has accused NECC of violating licensing rules.
Its "pharmacy license did not allow it to ship large quantities for general use," Michigan Attorney General Bill Schuette said on Friday as the state suspended the company's license and opened an investigation. If found guilty of violating the Michigan public health code, officials of NECC, which produced the tainted steroid linked to the scandal, could face a prison sentence, the attorney general's complaint said.
Several other states including Indiana, Minnesota and Ohio are investigating the company. Still others, including New Hampshire and the hardest hit state of Tennessee, have scheduled administrative hearings on possible violations.
Massachusetts prohibits pharmacies such as NECC, which create drugs that are unavailable from pharmaceutical companies, from selling medications without being in receipt of a prescription. It is not illegal, however, for healthcare providers to buy in bulk from licensed pharmacies, of which NECC was one.
Emails between NewSouth NeuroSpine and NECC show NECC solicited bulk orders with the promise of lower costs in return for higher ordering volume - sometimes offering competitive price quotes for drugs that had not been ordered by the physician.
In July, Barron offered in an email to supply NewSouth NeuroSpine with 50 vials per month of a steroid at a cost of $20 per vial.
"If you are using approximately 50 per month your total yearly savings, if sourced through NECC, would be $4,500," Barron said in an email.
Frank York, the chief executive of NewSouth, told Reuters the center did not order or purchase the steroid from NECC. The products it ordered, he said, included items such as a contrast agent used in X-rays that the center could not get elsewhere in the dosages it needed and were provided without prescriptions.
And while the physicians were asked by NECC to fill out a "Prescription Order Form," the form acted more as a bulk ordering form than a standard physician's prescription, York said.
In one email, Barron asked the clinic to provide NECC with a list of patients scheduled for upcoming procedures "to correspond with the medication."
"If you are ordering 75 units we will need a representation of patients that you plan to use the medication on," Barron said in the email. "If one day's schedule has close to 75 patients that will be acceptable to fulfill the order. If it is easier for you to provide a simple list of names that would be OK too."
The clinic did not provide its schedule to NECC for patient privacy reasons, according to York, who added that the clinic did not receive any of the tainted steroid implicated in the meningitis outbreak.
Even without the names or individual prescriptions, however, NECC continued to supply NewSouth, York said.
Massachusetts health officials said at a press briefing on Thursday that NECC appears to have been operating in violation of the state's compounding pharmacy licensing requirements, though they did not go into detail.
"This organization chose to apparently violate the licensing requirements under which they were allowed to operate," Madeleine Biondolillo, director of the Bureau of Health Care and Safety at the Massachusetts Department of Public Health, said on a call with reporters on Thursday.
State and federal regulators in the briefing declined to say whether they previously knew about NECC's bulk sales to entities including the U.S. Department of Veterans Affairs. They said investigations were ongoing.
Regulators were not immediately available to comment on NECC's interactions with Ameridose.
While Massachusetts conducts periodic inspections of compounding pharmacies, the state does not track the volume of medications prepared and distributed at its licensed pharmacies, Biondolillo said.
(Additional reporting by Debra Sherman in Chicago, Svea Herbst and Tim McLaughlin in Boston; Editing by Mary Milliken, Lisa Shumaker, Martin Howell and Bill Trott)
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