Claims Notices Going to Saint Thomas Victims

By Walter F. Roche Jr.



The administrator of a settlement fund for Nashville, Tenn. area victims of the 2012 fungal meningitis outbreak has begun notifying victims that they must formally submit their claims by the end of the year.
The victims will be sharing in a settlement in excess of $20 million reached in negotiations with the Saint Thomas Outpatient Neurosurgical Center, where they were injected with fungus tainted spinal steroids shipped from a  now shuttered Massachusetts drug compounding firm.
Attorneys for victims confirmed today that their clients had begun to receive letters, which were mailed out earlier this week.
Details of the settlement have not been made public. The agreement with Saint Thomas Health and the Howell Allen Clinic, the co-owners of the outpatient neurosurgical center, came before any of the more than 100 cases could go to trial.
Attorneys for both sides have declined to discuss any details, citing confidentiality agreements.
The Nashville notices come as victims from across the country, including the Nashville area, are getting notices of awards from a national settlement fund created in the bankruptcy of the New England Compounding Center. According to state and federal regulators NECC was the source of the contaminated vials of methylprednisolone acetate.
In a related development federal prosecutors in Boston, Mass. have filed notice that they are appealing the recent decision by U.S. District Judge Richard Stearns to dismiss charges against three former NECC employees. The appeal will be made to the First Circuit Court of Appeals
Stearns dismissed charges against Kathy Chin, Michelle Thomas and Alla Stepanets. The three were among 14 owners and employees of NECC indicted in late 2014 after a lengthy grand jury investigation of the 2012 outbreak.
Stearns concluded that the roles played by the three did not reach the threshold required for criminal charges.
The two defendants facing the most serious charges, 25 counts of second degree murder, are scheduled to go on trial early next year. Glenn Chin and Barry Cadden have entered not guilty pleas to the second degree murder and other charges.
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US Attorney Appeals NEC Dismissals

By Walter F. Roche Jr.

Federal prosecutors are appealing a judge's decision

NOTICE OF APPEAL
Notice is hereby given that the United States of America (the prosecution in the above- captioned case) hereby appeals to the United States Court of Appeals for the First Circuit from the District Court’s (Stearns, J.) (1) October 4, 2016 Memorandum and Order on Defendants’ Motions to Dismiss, which dismissed Counts 104-107 and 108-109 as they relate to Ms. Chin and Ms. Thomas (docket number 675, entered on the docket on October 4, 2016); (2) October 4, 2016 electronic order dismissing Counts 96-98, 101-103, and 108, relating to Ms. Stepanets (docket number 678, entered on the docket on October 4, 2016), and (3) from the Court’s November 16, 2016 denial of the government’s motion for reconsideration (docket number 725, entered on the docket on November 16, 2016).

NECC Defendant Seeks Three Month Trial Delay

By Walter F. Roche Jr.

Charging that his codefendant is planning to blame him alone for actions leading to a deadly fungal meningitis outbreak, one of the men facing 25 counts of second degree murder is asking for a delay in his trial until early Spring.
Glenn Chin, citing a mountain of newly discovered evidence, submitted the request today for the delay in his Jan. 2 trial on charges stemming from the 2012 outbreak which sickened 778 patients, killing 77 of them.
Stating that his codefendant, Barry Cadden, "is more than willing to save himself at the expense of his employee," the motion  charges that Cadden will be attempting to "place the blame solely and exclusively on Glenn Chin."
Cadden and Chin were charged with the second degree murder and racketeering  charges in late 2014 following a lengthy federal investigation of the New England Compounding Center, the defunct Framingham, Mass. company blamed for shipping thousands of fungus riddled steroids to health providers across the country.
The three-page motion charges that while Cadden, part owner of NECC, has had access to thousands of documents from a civil case for four years, Chin's lawyer only learned of their existence in October.
"Cadden will use these documents to show that Cadden had nothing to do with the alleged contamination of the products manufactured by NECC," the motion states.
The split between Cadden and Chin, NECC's supervisory pharmacists, comes only days after lawyers for the two defendants filed a joint motion seeking to force federal prosecutors to disclose evidence that would justify the second degree murder charges.
Filed by his attorney Stephen Weymouth, Chin's motion today also cites "12 million pages of discovery" provided by prosecutors, including 3.1 million in 15 increments over the past year alone. In addition prosecutors produced 70 grand jury transcripts.
But it is the newly discovered documents from a repository created in related civil litigation that the motion says "are crucial to Chin especially in the context of what Cadden intends to do at trial."
The motion charges that Cadden will "use every single document in his possession" to lay the blame on Chin.
"The fact that Cadden has had these documents for four years, while Chin is reviewing the documents for the first time is not fair and places Chin in a very difficult position," the motion states, adding that Chin now must defend himself "in this life and death case" facing not only the federal government but also his former boss.
The evidence in the civil case, according to the motion, includes testimony from dozens of witnesses including David Kessler, former head of the U.S. Food and Drug Administration.
As the motion notes, Cadden had access to the civil trial documents because he was one of the original defendants. His attorneys recently sought and obtained permission from the judge in the civil case to use the documents in his defense against criminal charges.
Weymouth stated in the motion that he had not discussed his request with federal prosecutors, but he expected them to oppose it.
U.S. District Judge Richard J. Stearns, who is presiding over the case, indicated when setting the Jan. 2 trial date that he would not be receptive to any further delays.
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Virginia Firm Joins Motion Seeking Delayed Fees

By Walter F. Roche Jr.

A Virginia law firm representing some 33 victims of the 2012 fungal meningitis outbreak is lending its support to a motion to delay the payment of lawyers fees until the victims themselves get an initial payment from a trust fund.
In a two-page filing today in U.S. District Court in Boston, Mass. the two lawyers asked U.S. District Rya Zobel to withhold payment of $12.5 million in legal fees and expenses until at least 90 percent of the outbreak victims have received an initial payment.
"It is manifestly inappropriate for fees and costs to be distributed ... when so many approved claimants, several affected individuals and families, have received nothing," the filing states.
John E. Lichenstein and Gregory Lyons of the Lichenstein Law Group in Roanoke, Va. signed the filing.
Earlier this week eight lawyers for victims from Tennessee, Indiana and Virginia filed a similar motion asking Zobel to put a hold on lawyers fees until the court appointed trustee certifies that 90 percent of the victims have received a payment.
That motion also asks Zobel to order the trustee, Lynne Riley, to file detailed monthly reports on the number of checks sent out and a breakdown of the category of each of the recipients. Under a court approved plan payments to victims are based on the severity of the illness and other factors, such as length of hospitalization.
The payments will come from a so-called national settlement fund created during the bankruptcy of the New England Compounding Center, the defunct drug firm blamed for the deadly 2012 outbreak.
Some 778 patients were sickened, many suffering fungal meningitis. At least 77 died from fungus riddled steroids shipped by NECC.
In the motion filed today, Lichenstein and Lyons wrote, "Many of these clients suffered catastrophic injury and permanent disability from the resulting fungal meningitis and secondary infections; others died."
According to the attorneys thus far only two of their clients have received a payment from the trust fund, which could total some $157 million.
"All those who survived live with uncertainty and fear of developing fungal disease or of having it recur.
A motion to pay the $12.5 million is pending before Zobel and it is scheduled for consideration at a Dec. 8 hearing.

Delay Sought in $12.5 Million Lawyers' Fees

By Walter F. Roche Jr.

A group of attorneys is asking a federal judge to delay the payment of $12.5 million in lawyers fees until victims of the 2012 meningitis outbreak get their first payments from a trust fund.
Two motions filed Tuesday in U.S. District Court in Boston, Mass. seek the payment delay and detailed periodic reports on the amount of money being distributed to outbreak victims.
"Lawyers should not be paid before victims," the motion states, citing the "inordinate delay in settlement payments."
The motions follow a request filed Monday seeking payment of the $12.5 million in so-called common benefit fees earmarked for those lawyers who performed services leading to the creation of the trust fund. That motion is set for consideration at a Dec. 8 hearing before U.S. District Judge Rya Zobel.
Noting that the original motion in support of the fees was based on the assumption that most victims would already have been paid previously, the motion cites the slow pace of payments thus far. Only 14 percent of the victims received an initial payment, according to the motion.
"Given the slow pace of benefit payments, it seems very unlikely that virtually all the claimants will have first received their first payment by the time the plaintiff steering committee's motion to disburse common benefit funds is heard during the Dec. 8 status conference," the motion states.
The motion was signed by eight attorneys: George Nolan, Daniel Clayton, Douglas Jones,
Jason Denton and Rebecca Blair from Tennessee,  J. Scott Sexton from Virginia, Douglas Small of Indiana  and J. Kyle Roby of Kentucky.
Stating that paying lawyers before victims "would be unwise for several reasons," the motion warns that doing so would offend innocent victims and undermine public confidence.
Citing the data provided thus far, the motion states that it appears the tort trustee has been paying smaller claims "before claims of those who died or were seriously injured."
According to the motion the average payment thus far was $19,780.
In addition to seeking the delay in fee payments, the motion asks the court to order Lynne Riley, the trustee of the victims fund, to file monthly reports detailing the amount distributed including a breakdown of the amount going to each category of victims.
The trust fund or national settlement fund, estimated at $130 million to $157 million, was created under the bankruptcy of the New England Compounding Center, the company blamed for the fungal meningitis outbreak that sickened 778 patients, killing at least 77 of them.
The national settlement fund is part of some $200 million in funds earmarked for victims. The additional funding comes from settlements with healthcare providers who injected patients with contaminated NECC steroids

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Lawyers Submit $12.5 Million NECC Fee Request

By Walter F. Roche Jr.

Lawyers for victims of a deadly 2012 meningitis outbreak are formally seeking approval for payment of $12.5 million in fees and expenses including three last minute additions.
A proposed order authorizing the payments was submitted today in U.S. District Court in Boston, Mass. and it is expected to be considered at a Dec. 8 hearing before U. S. District Judge Rya Zobel.
The fees would go to lawyers who served on a plaintiffs steering committee in the litigation stemming from the fungal meningitis outbreak. If approved the payments will come out of a $200 million fund created in the bankruptcy of the New England Compounding Center, the now defunct firm blamed for the deadly outbreak.
In submitting the proposed order, lead attorney Thomas Sobol noted that no objections were filed to the payment proposal since it was introduced over a month ago.
New fees included in the motion total  $8,398.90 and are earmarked for accounting and other services.
In a development in a related criminal case, the two defendants charged with 25 counts of second degree murder are asking for a hearing before U.S. District Judge Richard Stearns in an attempt to force prosecutors to disclose what evidence they plan to present to support the homicide charges.
Barry Cadden and Glen Chin were indicted on those charges and others following a lengthy investigation of NECC by a federal grand jury. The two are scheduled for trial early next year. Lawyers for Cadden and Chin wrote in a 10-page memorandum that they had reviewed 12 million pages of evidence and reviewed notes from hundreds of interviews but found nothing that would justify a second degree murder charge.
"It is increasingly evident that there is no ...evidence," the motion states.
The two attorneys did concede there was evidence "supporting the conclusion that these people died as a result of being injected with methylprednisolone acetate that was compounded at NECC and became contaminated."
"But," the memo states, "there is no evidence of anything Cadden or Chin did to cause the contamination of these drugs."
Charging that prosecutors overreached in an effort to "craft the biggest possible case," Cadden and Chin's attorneys cited grand jury testimony of an investigator for the U.S. Food and Drug Administration who acknowledged that he was just speculating about the possible source of the contamination. 
The FDA, the motion states, was "unable to find any of the fungus believed to be responsible for the contamination" despite a thorough examination of NECC's Framingham, Mass. facilities.
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Drug Compounding Regulation Still Murky

By Walter F. Roche Jr.

A report by the U.S. General Accountability Office finds that a new federal law aimed at closing a loophole that allowed wide scale unregulated drug compounding has left many questions unanswered three years after its enactment.
The 70-page report, based largely on the responses to a survey of state pharmacy boards and other interested parties, found that neither the state boards or the U.S. Food and  Drug Administration can even determine the volume of compounded drugs being produced.
Meanwhile, the report states, the FDA, although it has collected massive amounts of data from newly authorized mass drug compounders, has not figured out how to compile that data into useful information.
The 2013 law, the Drug Quality and Security Act, was prompted by the 2012 fungal meningitis outbreak caused by a rogue Massachusetts drug compounding firm that had shipped thousands of vials of fungus laden steroids to health providers across the country.
Records in a criminal case stemming from a grand jury probe of the outbreak show 778 patients were sickened, many with a debilitating bouts of fungal meningitis. According to a filing in the criminal case 76 of those patients died. The deaths have continued, however, boosting that count even higher.
The new law authorized for the first time the licensing of mass compound drug manufacturers who can produce compound drugs without a patient specific prescription.
"Nearly all the states reported that they did not collect data on the volume of compounded drugs," the report states, adding that in 18 states regulators did not know whether, under the new law, general practice physicians could legally compound drugs in their offices.
"Notably, nearly all of the states we surveyed reported having drug  compounding law or policies for
pharmacists, but not for physicians," the report states. 
The GAO reported that as of April 22 of this year 40 of 59, or nearly 70 per cent of mass drug compounding firms had not provided some or all of the data the federal agency had requested.
And while the FDA says the new law does not allow it, 39 states reported that "anticipatory compounding of both sterile and non-sterile drugs is authorized or allowed in their state." Only one state reported that it was illegal.
In other areas, the GAO found that 21 states now require specialized training of inspectors who are assigned to inspect drug compounding facilities and inspections are conducted as often as annually or as long as five years, according to the survey results.
Thirteen states reported imposing monetary penalties on drug compounders in 2014, while a dozen did so in 2015.
The FDA, according to the report, had conducted 75 inspections at 59 mass drug compounding facilities as of April 16 and issued 24 warning letters. There were 15 voluntary recalls of compounded drugs during the same period.
Dr. Michael Carome of Public Citizen, a nonprofit advocacy group, said that while he has seen some improvement in drug compounding the violations being reported by the FDA at so-called outsourcing facilities are concerning.
What is troubling is the high percentage of outsourcing facilities inspected by the FDA that have received warning letters describing serious problems in the production of sterile compounded drugs," Carome said, noting that those warning letters have come as the FDA has "ramped up" its inspections of those mass producers of compounded drugs.

A new report by the Government Accountability Office (GAO) finds that while the US Food and Drug Administration (FDA) has taken steps to improve its oversight of drug compounders, challenges at both the state- and FDA-level remain.

Background

Unlike traditional drugmakers, drug compounders are exempt from certain requirements of the Federal Food, Drug and Cosmetic (FD&C) Act. These exemptions allow compounders operating under section 503A of the act to produce drugs without complying with current good manufacturing practice (cGMP) and certain labeling requirements, and sell those drugs without marketing approval from FDA.
The safety of compounded drugs has been a high profile issue for FDA since an outbreak of fungal meningitis linked to a Massachusetts-based compounder killed 64 people in 2012.
In response to the outbreak, Congress passed the Drug Quality and Security Act (DQSA), which amended the Federal Food, Drug and Cosmetic Act (FD&C Act) to clarify requirements for compounders and created a pathway for compounders to register with FDA as outsourcing facilities.
Under the DQSA, registered outsourcing facilities operating under section 503B of the FD&C Act must follow cGMP requirements and are required to report adverse events to FDA for the drugs they produce in order to maintain exemptions for labeling and approval requirements.

GAO Report

Since the passage of the DQSA, GAO says FDA has made progress toward its new and clarified responsibilities with regard to drug compounding.
According to GAO, the agency has conducted more than 300 inspections of compounding facilities between May 2012 and April 2016, 75 of which were of registered outsourcing facilities. Many of these inspections led to action by FDA, including issuing numerous Form 483s and warning letters to compounders.
"These 75 inspections were at 59 of the 91 facilities that had registered with FDA," GAO writes. However, according to GAO, "many of the entities that were registered as outsourcing facilities withdrew their outsourcing facility registration submission before the agency scheduled an inspection, and others were not yet operating when the agency attempted to inspect them."
GAO says it also found that FDA generally met its obligations to publish guidance and other documents related to compounding, some of which were required under the DQSA.
In total, FDA has finalized seven guidance documents and 10 draft guidances related to compounding since 2014.
However, despite FDA's actions, GAO found that some stakeholders felt the agency was slow to publish guidance.
"Some stakeholder organizations said the amount of time it takes FDA to finalize the guidance and other documents … is challenging," GAO writes, noting that FDA cited the number of comments it received contributed to the delay.
However, overall, states appear to be content with the level of communication, with roughly three quarters of states saying they are either very or somewhat satisfied, or at least neither satisfied nor dissatisfied with the agency.
Another issue, GAO says, is that the data being collected by FDA and states paints an incomplete picture of the extent of drug compounding.
"According to FDA officials, there is no good source for data on the extent of drug compounding and who is doing it except for data on outsourcing facilities," GAO writes. Despite requirements for outsourcing facilities to provide FDA with data on the number of units of drugs they produce every six months, FDA told GAO that "not all outsourcing facilities provided these reports and the data provided were not yet collected and maintained in a standard format."
Furthermore, FDA told GAO that most registered outsourcing facilities have failed to submit all the required data to the agency. "As of April 22, 2016, 40 of the 59 outsourcing facilities had not provided some or all required reports," GAO writes.
As such, GAO says it was unable to look at aggregate data for drugs produced by registered outsourcing facilities for the report.
Going forward, FDA told GAO it plans to update its electronic reporting system so that future reports can be submitted electronically in a standardized format.
GAO
- See more at: http://www.raps.org/Regulatory-Focus/News/2016/11/18/26217/GAO-Report-Highlights-Ongoing-Challenges-in-Oversight-of-Drug-Compounders/#sthash.GB3fObCd.dpuf