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 company that mixes drugs for hospitals nationwide, sought on Wednesday to distance itself from the firm at the center of a deadly U.S. outbreak of fungal meningitis, even though the two pharmacies have common owners.

Both companies are owned by Gregory Conigliaro, an engineer who invented a way to turn plastic into pot-hole filler, and his brother-in-law, Barry Cadden, a pharmacist in charge of pharmacy operations at the New England Compounding Center, which distributed thousands of vials of a contaminated steroid that has been implicated in 12 deaths.

Both firms mix, dilute and prepare drugs into formulations not typically available through pharmaceutical manufacturers.

O'Neill and Associates, a public relations firm hired by Ameridose, confirmed the shared ownership in an emailed statement.

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

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

"Ameridose is a separate entity from New England Compounding Center, with distinct operational management," said O'Neill in its statement. "We have separate production facilities, separate processes and operate at separate locations in different cities."

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 - and into a new, 70,000-square-foot building in nearby Westborough to accommodate 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 made any decisions, and was not involved in any discussions," she said.

Conigliaro, on the other hand, is at Ameridose on a regular basis, 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 in Pharmacy, which is responsible for the licensing and monitoring of pharmacists in the state. She said she recuses herself from any discussions involving Ameridose or NECC.

Officials at NECC did not respond to multiple calls seeking comment.

Medical Sales Management, a company whose board includes Cadden and Conigliaro, provides human resources, accounting and information technology services.

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


Compounding pharmacies such as NECC are permitted to make small amounts of medications based on specific prescriptions for individual patients.

State and federal regulators are investigating how thousands of vials of preservative-free methylprednisolone acetate were shipped to healthcare facilities in multiple states and infected 124 people across 10 states, killing 12, according to the Centers for Disease Control and Prevention.

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

Cadden's own personal pharmacist license is subject to a restriction preventing him from practicing, at least for now, according to public records, though more details were not available.

In 2004, the U.S. Food and Drug Administration and the Massachusetts Board of Pharmacy inspected NECC and in 2006 the FDA issued a warning letter, taking NECC to task for opening sterile products and repackaging them in a way that could damage human health. It said it was particularly concerned about NECC's splitting of the cancer drug Avastin into multiple doses to be used to treat an eye condition.

"Microbes could cause endophthalmitis, which has a high probability for significant vision loss," the agency said in its warning letter. "The absence of control over storage, and delays before use after repackaging, only exacerbate these concerns."

Erica Jefferson, a spokeswoman for the U.S. Food and Drug Administration, declined to say whether the agency had followed up on the warning letter or if it had checked to see if the company had mended its ways. She said the 2006 letter was unrelated to the current meningitis situation but that an investigation is ongoing.

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

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

NECC did not respond though its public relations firm to questions asking whether it had rectified the problems identified by the FDA six years ago. The Massachusetts Department of Health also did not respond to questions about whether it followed up on complaints made against NECC and reflected in the FDA's warning letter.

In a statement, Dr. Madeleine Biondolillo, Director of the department's Bureau of Healthcare Safety and Quality, said that it "reacted swiftly to this serious situation, and took immediate steps to close NECC through the voluntary surrender of its operating license."

Neither the FDA nor the state department of health would say whether they will investigate Ameridose, though Biondolillo in her statement said the investigation around the meningitis outbreak will include all issues, "including corporate governance."


Ameridose was formed in February 2006 and has built itself into one of the country's leading providers of prefilled syringes 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 Medical Command.

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

Still, Ameridose has not been problem-free. In 2008 it recalled 155 injectable doses of the narcotic painkiller fentanyl because of concerns they were too potent, FDA records show. And it fought a battle with Irving, Texas-based Novation LLC, which purchases products on behalf of a network of clients using its group purchasing power to negotiate discounts.

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

Novation said in a statement that while it "vigorously disputed each and every claim made in the lawsuit" the parties ultimately agreed to settle. It declined to say why. In a joint statement on Ameridose's website the companies said they have entered into an expanded contract for Ameridose to deliver compounding and mixing services to Novation member hospitals.

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

Novation said it had reached out to Ameridose "in light of recent developments" and was assured that Ameridose and NECC "do not share any products or facilities, and that no NECC products are in the Ameridose pipeline."

In June, Ameridose won a contract to compound and repackage drugs for Brentwood, Tennessee-based HealthTrust Purchasing Group LP, a consortium of hospitals and surgery centers with combined annual purchasing volume of more than $20 billion and whose owners include hospital giant HCA Holdings Inc .

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

(Reporting by Toni Clarke; Editing by Martin Howell and David Gregorio)