By Tim McLaughlin
Dec 21 (Reuters) - The Massachusetts pharmacy linked to a
deadly U.S. meningitis outbreak filed for Chapter 11 bankruptcy
on Friday and said it would establish a fund to compensate
victims.
According to the Centers for Disease Control and Prevention,
39 people have died and more than 600 have been injured from
injections of methylprednisolone acetate, a drug typically used
to ease back pain.
New England Compounding Center, the specialty pharmacy, shut
down in October after shipping tainted vials of the steroid, and
filed for bankruptcy with between $1 million to $10 million in
assets, court documents show.
NECC, a private company based in Framingham, Massachusetts,
shipped the drug to medical facilities throughout the United
States. NECC had less than $2.34 million in debts when it filed,
according to the documents in U.S. Bankruptcy Court for the
District of Massachusetts.
The pharmacy's equity shareholders are Carla Conigliaro with
a 55 percent stake, Barry Cadden with a 17.5 percent stake, Lisa
Conigliaro Cadden with a 17.5 percent stake and Gregory
Conigliaro with a 10 percent stake, the documents show. In
bankruptcy, the equity of a company typically has no value.
Its largest unsecured creditor is McKesson Drug and it owes
it $143,169, the documents show.
The company said in a statement that it has filed papers
with the court to pursue a greater, quicker payout to its
creditors than they could achieve through piecemeal litigation.
NECC said Keith Lowey would be NECC's independent director
and chief restructuring officer. He will oversee setting up a
compensation fund.
"We want to assemble a substantial fund, and then distribute
it fairly and efficiently to those who are entitled to relief,"
Lowey said in a statement.
NECC's bankruptcy counsel is Daniel Cohn of Murtha Cullina
LLP.
Before the deadly outbreak, NECC escaped harsh punishment
from health regulators several times in the years leading up to
the health crisis that has raised questions about oversight of
the customized drug mixing industry, Massachusetts records show.
Problems at NECC date as far back as 1999, the year after it
began operations, according to hundreds of pages of documents
obtained under a Freedom of Information Act request.
And the documents show regulators refraining from the
harshest sanctions available to them, even as the list of
complaints against NECC continued to grow.
The documents came to light after steroid shots from NECC
were given to thousands of patients across the country.
Among the reported problems was a company official handing
out blank prescriptions. And an outside evaluation firm found
inadequate documentation and inadequate process controls
involving sterilization at NECC in 2006, the documents show.
(Additional reporting by Caroline Humer)
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