A sign requesting "No Soliciting" hangs on the door of New England Compounding in Framingham, Mass., Thursday, Oct. 4, 2012. (AP Photo/Stephan Savoia)
BOSTON (CBS) -- Massachusetts regulators in 2004 proposed a formal reprimand for a company now linked to a deadly meningitis outbreak, but they never delivered it after the company protested the reprimand could be "fatal to the business."
The sanction by the Board of Registration in Pharmacy was included in a proposed consent agreement that was meant to resolve complaints against the New England Compounding Center in Framingham. The complaints included a failure to meet accepted standards for making the same steroid that's been connected to the outbreak.
The agreement was among documents released this week by the state Department of Health that provide more details about past incidents at NECC, which was shut down in the wake of the fungal meningitis outbreak that has reached 17 states, sickening 312 people, 24 of whom have died. Compounding pharmacies like NECC custom mix solutions in doses or forms generally not commercially available.
The state has now moved to revoke NECC's license, but the reprimand represents a missed opportunity to crack down on the lab years before the current outbreak.
The proposed consent agreement, sent to owner Barry Cadden for review in October 2004, included the reprimand and a three-year probationary period for the company's registration and Cadden's license.
In its response, the company's attorney wrote that the board's dealings with the company were "a success story" and a reprimand was unwarranted.
"The collateral consequences to many, if not all of NECC's 42 other licenses (to operate in other states), would be potentially fatal to the business," attorney Paul Cirel wrote.
"Such a catastrophe is clearly not the intended result of the Board's proposed reprimand, nor is it warranted in this case," Cirel wrote. "The Board's mandate is to protect the public health safety and welfare, not punish the licensees."
In a footnote, he wrote, "Once disclosed, the reprimand will surely result in inquiries/investigations in those other jurisdictions. Regardless of the derivative actions taken, the attendant legal and administrative costs will be devastating."
The case ended without disciplinary action as part of a different consent agreement reached with the board in 2006.
Cirel did not respond to requests for comment from The Associated Press.
The 2006 agreement was signed under then-Gov. Mitt Romney's administration, but some members from that time remain on the pharmacy board.
Alec Loftus, a spokesman for the state's office of health and human services, said the state has expanded its investigation to include how the 2006 consent agreement was reached, including why the board never issued the reprimand and whether that was related to the protest from the company.
Loftus called the consent agreement "very troubling."
He added that the state was still compiling information on how frequently formal reprimands are given.
Loyd V. Allen Jr., editor of the International Journal of Pharmaceutical Compounding, said the proposed three years' probation indicates the board considered the violations very serious. He said a plea from the company should have been irrelevant to the board's decision.
"Whether or not it's going to be hurtful or harmful to the business shouldn't really be the issue if patient safety is on the line," Allen said.
The pharmacy board recommended the reprimand after an investigation that followed a confidential report filed with a U.S. Food and Drug Administration district office in Stoneham in 2002. The report alleged that two patients had an unspecified "adverse effect" after taking an NECC compounded Betamethasone Repository Injection, a steroid used to treat joint pain and arthritis that's different from the one linked to the current meningitis outbreak.
An inspector's report, completed in March 2004 after numerous interactions between the state and NECC, said a toxin had been found in the drug and the company couldn't produce various records about the drug, including test results on its sterility. Similar problems have been uncovered in a preliminary investigation prompted by the outbreak, including failure to sterilize its products long enough and inadequate testing of its sterilization equipment.
The 2004 report also noted the FDA had notified the state pharmacy board in October 2002 about "a second incident" involving a drug the company had produced, methylprednisolone acetate, which is the same steroid linked to the outbreak.
The report offered no details about the second incident. But the FDA report to Massachusetts in 2002 came three months after New York resident William Koch became sick with bacterial meningitis after receiving an injection of the same steroid, made at NECC. He died as a result in 2004 and NECC later settled a lawsuit in the case.
A timeline of complaints against the company, released Monday among the Department of Public Health documents, showed only an October 2002 complaint involving that particular steroid, and the complaint originated in New York, where Koch lived.
The FDA said it could not give details about what it told the state in October 2002 and referred the AP to public records request forms.
The inspector's report said that a re-inspection of NECC showed it had corrected its problems by 2004. But the inspector cited previous concerns against the agency dating from 1999, and wrote, "It is this investigator's opinion that a formal reprimand should be issued."
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