Wires

Meningitis outbreak tangles 2 pharmacies with common owners

By Tim McLaughlin and Toni Clarke and Aaron Pressman

BOSTON, Oct 10 (Reuters) - Ameridose LLC, a private companythat mixes drugs for hospitals nationwide, sought on Wednesdayto distance itself from the firm at the center of a deadly U.S.outbreak of fungal meningitis, even though the two pharmacieshave common owners.

Both companies are owned by Gregory Conigliaro, an engineerwho invented a way to turn plastic into pot-hole filler, and hisbrother-in-law, Barry Cadden, a pharmacist in charge of pharmacyoperations at the New England Compounding Center, whichdistributed thousands of vials of a contaminated steroid thathas been implicated in 12 deaths.

Both firms mix, dilute and prepare drugs into formulationsnot typically available through pharmaceutical manufacturers.

O'Neill and Associates, a public relations firm hired byAmeridose, confirmed the shared ownership in an emailedstatement.

The statement said Cadden is president and pharmacist incharge at NECC and Conigliaro is an officer and minorityshareholder who is not involved in its pharmacy operations.

Conigliaro is executive vice president of Ameridose, whileCadden is a minority shareholder who is not involved in any ofits operations the firm said.

"Ameridose is a separate entity from New England CompoundingCenter, with distinct operational management," said O'Neill inits statement. "We have separate production facilities, separateprocesses and operate at separate locations in differentcities."

Conigliaro's sister Lisa is married to Cadden.

In early 2011, Ameridose moved out of its Framingham,Massachusetts facility - which was near NECC's operations - andinto a new, 70,000-square-foot building in nearby Westborough toaccommodate its growing operations.

Sophia Pasedis, head of regulatory affairs at Ameridose,said Cadden had nothing to do with operations at Ameridose.

"He never came to any functions at Ameridose, he never madeany decisions, and was not involved in any discussions," shesaid.

Conigliaro, on the other hand, is at Ameridose on a regularbasis, she said, mainly overseeing the facilities.

"Greg is a wonderful man and a good human being," she said."He would never hurt a soul."

Pasedis sits on the Massachusetts Board of Registration inPharmacy, which is responsible for the licensing and monitoringof pharmacists in the state. She said she recuses herself fromany discussions involving Ameridose or NECC.

Officials at NECC did not respond to multiple calls seekingcomment.

Medical Sales Management, a company whose board includesCadden and Conigliaro, provides human resources, accounting andinformation technology services.

It has provided services to both NECC and Ameridose,according to federal court filings.

COMPOUNDING PROBLEMS

Compounding pharmacies such as NECC are permitted to makesmall amounts of medications based on specific prescriptions forindividual patients.

State and federal regulators are investigating how thousandsof vials of preservative-free methylprednisolone acetate wereshipped to healthcare facilities in multiple states and infected124 people across 10 states, killing 12, according to theCenters for Disease Control and Prevention.

At the insistence of the Massachusetts Department of PublicHealth, NECC, which had come to the attention of state andfederal regulators following complaints going back to 2002,surrendered its license and recalled all products distributedfrom the facility in the wake of the meningitis outbreak.

Cadden's own personal pharmacist license is subject to arestriction preventing him from practicing, at least for now,according to public records, though more details were notavailable.

In 2004, the U.S. Food and Drug Administration and theMassachusetts Board of Pharmacy inspected NECC and in 2006 theFDA issued a warning letter, taking NECC to task for openingsterile products and repackaging them in a way that could damagehuman health. It said it was particularly concerned about NECC'ssplitting of the cancer drug Avastin into multiple doses to beused to treat an eye condition.

"Microbes could cause endophthalmitis, which has a highprobability for significant vision loss," the agency said in itswarning letter. "The absence of control over storage, and delaysbefore use after repackaging, only exacerbate these concerns."

Erica Jefferson, a spokeswoman for the U.S. Food and DrugAdministration, declined to say whether the agency had followedup on the warning letter or if it had checked to see if thecompany had mended its ways. She said the 2006 letter wasunrelated to the current meningitis situation but that aninvestigation is ongoing.

The FDA also warned NECC in 2006 that it was against the lawfor it to sell compounded drugs without first receiving aprescription for an individually identified patient.

"Your firm has reportedly also told physicians' offices thatusing a staff member's name on the prescription would suffice,"the letter said.

NECC did not respond though its public relations firm toquestions asking whether it had rectified the problemsidentified by the FDA six years ago. The MassachusettsDepartment of Health also did not respond to questions aboutwhether it followed up on complaints made against NECC andreflected in the FDA's warning letter.

In a statement, Dr. Madeleine Biondolillo, Director of thedepartment's Bureau of Healthcare Safety and Quality, said thatit "reacted swiftly to this serious situation, and tookimmediate steps to close NECC through the voluntary surrender ofits operating license."

Neither the FDA nor the state department of health would saywhether they will investigate Ameridose, though Biondolillo inher statement said the investigation around the meningitisoutbreak will include all issues, "including corporategovernance."

IN BUSINESS WITH BROTHER-IN-LAW

Ameridose was formed in February 2006 and has built itselfinto one of the country's leading providers of prefilledsyringes and premixed intravenous and epidural pain medications.Recent clients have included Kern Medical Center in Bakersfield,California, which this year renewed a deal for up to $1 million,public records show. It has also won contracts with the U.S.Department of Veterans Affairs and the U.S. Army MedicalCommand.

"There are no other sources known that would provideproducts to support our patients," the Army said in a July 2012contract disclosure notice.

Still, Ameridose has not been problem-free. In 2008 itrecalled 155 injectable doses of the narcotic painkillerfentanyl because of concerns they were too potent, FDA recordsshow. And it fought a battle with Irving, Texas-based NovationLLC, which purchases products on behalf of a network of clientsusing its group purchasing power to negotiate discounts.

The two recently settled a lawsuit in which Ameridoseclaimed it had been slandered by Novation spreading word thatAmeridose's quality control standards were subpar, according todocuments filed in U.S. District Court in Massachusetts.

Novation said in a statement that while it "vigorouslydisputed each and every claim made in the lawsuit" the partiesultimately agreed to settle. It declined to say why. In a jointstatement on Ameridose's website the companies said they haveentered into an expanded contract for Ameridose to delivercompounding and mixing services to Novation member hospitals.

"Novation is confident that Ameridose delivers qualityproducts and services to member hospitals," the statement said.

Novation said it had reached out to Ameridose "in light ofrecent developments" and was assured that Ameridose and NECC "donot share any products or facilities, and that no NECC productsare in the Ameridose pipeline."

In June, Ameridose won a contract to compound and repackagedrugs for Brentwood, Tennessee-based HealthTrust PurchasingGroup LP, a consortium of hospitals and surgery centers withcombined annual purchasing volume of more than $20 billion andwhose owners include hospital giant HCA Holdings Inc .

"The regulatory agencies have not raised concerns aboutAmeridose," said HealthTrust spokeswoman Andrea Mitchell. "Thereis no indication that their products are anything but safe."

(Reporting by Toni Clarke; Editing by Martin Howell and DavidGregorio)

((toni.clarke@thomsonreuters.com)(617-856-4340)(Reuters

Messaging: toni.clarke.reuters.com@reuters.net))

Keywords: MENINGITIS AMERIDOSE/NECC