The Massachusetts pharmaceutical company linked to a fungal meningitis outbreak that caused 44 deaths has reported nearly $21.2 million in both salaries to key executives and credit card reimbursements since December 2011.
New England Compounding Center made the disclosures in a statement of financial affairs filed on January 18 in its bankruptcy case. The company filed for bankruptcy in December 2012.
Injectable steroids from three recalled lots of the company's preservative-free methylprednisolone acetate have been linked to a multistate meningitis outbreak and other infections. The Centers for Disease Control and Prevention has tallied 678 cases and 44 deaths linked to the outbreak.
The statement listed more than $16.3 million in payroll expenses for six individuals, including Barry Cadden, an owner, president, head pharmacist and director of pharmacy at New England Compounding until recently.
It also listed $4.8 million in credit card expenses, mostly for apparently personal use, with payees including gas stations, Whole Foods Market and Mercedes-Benz Financial Services.
In a press release, David Molton, a New York partner at Brown Rudnick who represents the official committee of unsecured creditors in the bankruptcy, said, "It is disturbing that significant amounts of company property were taken by insiders during the same period when they were permitting abhorrent conditions at the company that ultimately led to the injury and death of innocents."
New England Compounding's lead lawyer on the case, Daniel Cohn, a Boston partner at Murtha Cullina, declined to comment.
A January 24 hearing is scheduled at the U.S. bankruptcy court in Springfield, Mass., on whether the court should tap an independent trustee to replace the company's board of directors.
Meanwhile, the company faces dozens of lawsuits about the tainted medicine.
The judicial panel on multidistrict litigation (MDL) has scheduled a hearing for January 31 to decide whether to consolidate 123 cases in its docket.
Last month, Judge F. Dennis Saylor IV of the District of Massachusetts issued a broad order for plaintiffs and defendants in a consolidated Massachusetts docket to preserve potential evidence about the company's links to a fungal meningitis outbreak.
The order for New England Compounding concerned documents and physical evidence in clean rooms and other areas of the company. It also included document preservation instructions for sister company Ameridose LLC, which closed in October during a government investigation, and individual defendants.
Mark Zamora, the founding partner of Mark Zamora and Associates of Atlanta, who represents plaintiff Chad Green in one of the Massachusetts cases, said, "The scope of their greed is breathtaking." He added, "It's going to be a very unpleasant debtor's examination as they go through these. There's going to be some pain, and there should be."
This article originally appeared in The National Law Journal.
