Posted On: November 5, 2012 by Patrick A. Malone

Why Compounding Pharmacies Often Don’t Pay for Their Mistakes

As the death toll continues to rise from the meningitis outbreak after a compounding pharmacy distributed contaminated medicine a few months ago, how these facilities operate has come under increased scrutiny. A story published last week in USA Today detailed how compounding pharmacies escape regulatory punishment and end up paying for their mistakes only through lawsuits by injured patients for damages.

“In some cases,” the paper reports, “there's almost no penalty for pharmacies that break the rules, and the people who run them simply continue with business as usual, sometimes with tragic results.”

Compounding pharmacies “customize” medicine—they combine various ingredients to create products specific to individuals or discrete markets, but for regulatory purposes are not considered manufacturers. (See our recent post about how compounding drugs are made.)

According to USA Today, since 1990 the FDA has recorded about 200 adverse events associated with 71 compounded products.

In its review of state and federal legal and regulatory documents, USA Today tracked contaminated, adulterated and mismeasured products, and some that were counterfeit or illegal. Many compounding pharmacies went out of business not for their failure to uphold regulatory standards, but because they got sued for their skanky wares.

Personal injury lawsuits are an avenue for reparation by people who have been harmed by wrongdoing and malfeasance, but they’re hardly a substitute for governmental control. As Joanne Doroshow, executive director of the Center for Justice & Democracy at New York Law School told USA Today, civil lawsuits help “to make sure the most dangerous compounding pharmacies are forced out of business. Nothing else seems to be doing it … because the entire regulatory system lacks teeth."

Three such lawsuits have been filed against the Massachusetts pharmacy responsible for the current meningitis crisis. That number is decidedly preliminary.

The public hammer also fell: The Massachusetts Board of Registration in Pharmacy revoked the pharmacy’s license and those of three of its pharmacists. Among the cases reviewed by USA Today, it’s the only time a state permanently revoked a pharmacy’s license. And that’s pretty much the extent of the civil punishment the government can mete out. The Massachusetts state board is not empowered to issue fines for wrongdoing.

Criminal prosecution by the FDA and U.S. Justice Department remains a possibility, but it’s remote—it’s legally difficult to hold pharmacists accountable for deficient drugs they produce or dispense. Conflict of interest also might play a role.

Former FDA compliance officer Sarah Sellers told USA Today that she can’t recall another case in which a state closed a compounding pharmacy permanently, possibly because members of state pharmacy boards often operate or have interests in compounding pharmacies. "If there is conflict of interest at the state level, that may be a contributing factor in the lack of enforcement," Sellers said.

The paper recounts a story from 10 years ago of a meningitis outbreak in North Carolina due also to a contaminated injectable steroid produced by Urgent Care Pharmacy, a South Carolina compounding facility. After finding poor sanitation and deficient quality-control practices, state and federal investigators ordered it to cease selling the contaminated drug, and issued warnings to 11 states where they had been distributed.

The South Carolina Board of Pharmacy levied a $10,000 fine, shut it down until the pharmacy corrected its deficiencies and suspended the license of the pharmacist in charge.

Urgent Care declared bankruptcy a few months later in the wake of several lawsuits by victims who had been injured by the drug. But the pharmacist whose license was suspended was allowed to continue working on a probationary basis; he now works at another South Carolina pharmacy and his record, USA Today reports, shows him “in good standing” with “no disciplinary action.”

Forest Horne, a lawyer who represented the family of a woman who died after receiving a contaminated injection, told USA Today "The regulatory system failed. If that guy is able to go back and work in a pharmacy … I think the regulatory system is not working, because the conditions in that plant were absolutely abysmal.

"If these people aren't stopped through litigation, they're not going to be stopped."

This is no way to promote best medical practice and ensure patient safety. Litigation takes a long time and isn’t always successful. And we haven’t even touched on the topic many people find most troubling about free-wheeling compounding pharmacies: their role in producing and distributing illegal drugs.

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