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Healthcare Business News

Deal creates fund for victims of meningitis outbreak tied to compounding pharmacy

By Steven Ross Johnson
Posted: December 24, 2013 - 12:01 am ET

Owners of the former New England pharmacy that produced tainted steroids blamed for a fungal meningitis outbreak in 2012 agreed to pay $100 million to victims and creditors.

Under the agreement, the owners of the New England Compounding Pharmacy will contribute $100 million to a compensation fund. The proceeds will be shared among the company's creditors, as well as the more than 700 reported victims of the tainted epidural steroid injections shipped out of NECC's facility in Framingham, Mass.

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In December 2012 owners of NECC filed for Chapter 11 bankruptcy protection after the Centers for Disease Control and Prevention traced fungal contamination of medication that the company shipped to 75 medical facilities across 23 states. They were administered to an estimated 14,000 patients.

A total of 64 people died and more than 750 people suffered infections after they were injected with the tainted medications.

“We are pleased that a significant amount of funds will become available for distribution to victims and their families as compensation for the deaths, injuries and suffering they endured as a result of this tragic meningitis outbreak,” said Paul Moore, NECC's bankruptcy trustee.

Under the terms of the agreement, the company's owners are required to fund the compensation with cash proceeds, insurance, tax refunds and the sale of a business. Terms of the agreement must be approved by the U.S. Bankruptcy Court.

The outbreak triggered new scrutiny on the regulation of compounding pharmacies that mix large quantities of drugs, which the Food and Drug Administration claimed was largely under the jurisdiction of state authorities. Under a law enacted in November, large compounders are invited to register with the FDA and subject themselves to inspections.

Follow Steven Ross Johnson on Twitter: @MHSjohnson

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