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

Magistrate Denies Direct Access to Meningitis Files

By Walter F. Roche Jr.

A federal magistrate has ruled that if a defendant facing 25 counts of second degree murder wants access to related civil court files, he'll have to get them from a co-defendant also facing second degree murder charges.
Magistrate Jennifer Boal, in a ruling issued in U.S. District Court, denied a motion by Glenn Chin to get access to files amassed in related civil cases stemming from the 2012 fungal meningitis outbreak.
Boal in a prior ruling had granted co-defendant Barry Cadden limited access to the meningitis outbreak files.
In announcing the denial, Boal added, " the court clarifies" that its Sept, 29, 2016 order allowing Barry Cadden permission to use the files "includes the ability to share those materials with his co-defendants in the course of preparation for trial."
The ruling comes despite the fact that prosecutors had filed a motion in support of granting Chin and the other remaining defendants access to the civil litigation files.
Noting that they had originally opposed granting Cadden access to the files, Assistant U.S. Attorney William Weinreb wrote, "Nevertheless, in light of its earlier order, this court should make the same materials Cadden possesses available to the government and the other criminal defendants as well."
The ruling comes as the trial date for Cadden and Chin is fast approaching. Their trial is scheduled for Jan. 2, 2017. The other remaining defendants are scheduled for trial on lesser charges in April.
Chin and Cadden are both charged with 25 counts of second degree murder along with racketeering and mail and wire fraud charges.
Boal's order granting Cadden access to the now confidential files, limited him to those records amassed while Cadden was still a defendant in the civil actions.
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10 Outbreak Suits Against TN Clinic Dismissed

By Walter F. Roche Jr.

A federal judge has dismissed 10 suits filed in behalf of victims of the 2012 fungal meningitis outbreak against a Crossville, Tenn. clinic because the complaints failed to comply with Tennessee's health care liability statute.
In a decision handed down today in U.S. District Court in Boston, Mass., U.S. District Judge Rya Zobel concluded that 10 of the claims against the Specialty Surgery Center did not include certificates of good faith when health care liability claims were initiated, a requirement under Tennessee's health care liability law.
Zobel, however, denied dismissal motions in another five cases because lawyers in those cases filed the required certificates when they amended their original complaints to include claims under the state's health care liability law.
The Crossville clinic was one of three Tennessee locations where patients were injected with fungus laden steroids that triggered a nationwide fungal meningitis outbreak, sickening 778 patients and killing 77 of them.
All 15 cases that were the subject of Zobel's ruling today were initially filed with claims under Tennessee's product liability law.
In the five cases in which dismissal was denied, Zobel noted certificates of good faith were not included when the suits were first filed, but when those cases were amended to include health care liability claims, the certificates were attached.
Two of the remaining cases were amended to include health care liability claims but the certificates were not filed until about a month later.
"Their failure to file them (certificates of good faith) with their initial amended complaint was a fatal error that requires dismissal with prejudice," Zobel wrote.
In another eight cases Zobel found that certificates of good faith were never filed. Though the attorneys argued that there were "extraordinary circumstances" to explain the missing certificates, Zobel wrote that the lawyers offered "no explanation to show good cause as to why nine months later they still have not done so."
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NECC Judge Upholds Dismissals

By Walter F. Roche Jr.

The judge presiding over the criminal cases stemming from a deadly meningitis outbreak has flatly rejected an appeal by prosecutors to reverse his dismissal of charges against three defendants.
U.S. District Judge Richard Stearns concluded that the reconsideration motion "for the most part raises no new issues. It merely elaborates on arguments that it previously made."
Stearns said that despite the arguments by the U.S. Attorney, the charges against Alla Stepanets, Kathy S. Chin and Michelle Thomas did not meet the requirements of federal law.
In his original ruling Stearns, who presides in U.S. District Court in Boston, Mass., dismissed the charges against the three licensed pharmacists because he said they were merely checking outgoing orders and not legally dispensing prescription drugs.
"There is nothing about this clerical task (as alleged) that calls upon the professional judgment of a pharmacist," Stearns wrote.
The three were among 14 people indicted in late 2014 following a federal grand jury probe of the 2012 fungal meningitis outbreak caused by fungus laden steroids shipped from a now defunct Framingham, Mass. drug company, the New England Compounding Center
Calling one of the arguments by prosecutors "the latest red herring," Stearns scoffed at the idea that his decision could endanger the public health.
"This of course is not true," he concluded.
He also rejected what he described as the only new prosecution argument, that the three should have known something illegal was going on because some of the names on the prescriptions were clearly false.
"This is a dubious proposition," Stearns wrote."As the law has long made clear, mere presence at the scene of a crime, even when coupled with knowledge that a crime is being committed by others, is not sufficient to establish aiding and abetting."
Though all charges against Chin and Thomas were dismissed, Stepanets still faces trial on charges of conspiracy to defraud the federal government.
Chin is the wife of Glenn Chin, who was indicted on 25 counts of second degree murder in the same case. Glenn Chin and Barry Cadden, a former part owner of NECC who faces the same second degree murder charges, are scheduled for trial early next year.
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Prosecutor Wants All NECC Defendants to Get Civil Data

By Walter F. Roche Jr.

Federal prosecutors say that now that one defendant has been granted access to a repository of files, all the defendants in the fungal meningitis criminal case should be granted the same opportunity.
In a two-page filing this week in U.S. District Court in Boston, Mass. Assistant U.S. Attorney William Weinreb said that since the court has granted access to files in a related civil case to Barry Cadden, other defendants, including Glen Chin, should be given the same access.
Cadden and Chin are facing 25 counts of second degree murder in the criminal case stemming from the 2012 fungal meningitis outbreak caused by the New England Compounding Center.
In the filing this week Weinreb noted that prosecutors had opposed giving Cadden access to the civil suit files, accusing his lawyers of trying to do an end run around the normal discovery rules in criminal cases.
Despite those objections,  U.S. District Judge Rya Zobel ruled Cadden could have access to and use the civil file repository in his defense, subject to approval of the judge presiding over the criminal case.
The files at issue were gathered in a series of civil suits filed in the aftermath of the deadly 2012 outbreak. Cadden was originally one of the defendants in that civil case but the claims against him were eventually dropped.
In his filing Weinreb noted that neither Cadden or Chin "ever contributed to the repository nor participated in the (cases's) discovery. Indeed Chin was not even a party to the suit."
"Nevertheless," the filing states, "in light of its earlier order, this court should make the same materials Cadden possesses available to the government and the other criminal defendants as well."
The prior order granting Cadden access to the civil litigation data did limit him to data collected prior to his dismissal from the civil case.
Cadden and Chin are scheduled to go on trial on Jan. 5 of next year, while the remaining defendants have an April 2017 trial date.
The 2012 outbreak was caused by fungus laden steroid drugs produced by NECC and shipped to health care providers across the country. Cadden was part owner of NECC and Chin was a supervising pharmacist.
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