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Grand jury sets sights on compounding pharmacy

New England Compounding Center.

REUTERS

Federal agents searched the New England Compounding Center in October.

A federal grand jury in Boston has begun investigating the Framingham compounding pharmacy that made the tainted steroid injections blamed for at least three dozen deaths in seven states, according to several people familiar with the matter, including one who has been called to testify.

The grand jury has begun issuing subpoenas to people who worked at New England Compounding Center and at least one related company, Medical Sales Management of Framingham, which handled sales and administrative support for the pharmacy, the people said. The grand jury is expected to hear from at least some witnesses in federal court in Boston next week.

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The development is the latest sign that federal prosecutors are pursuing potential criminal charges against the companies or people deemed responsible for the outbreak. Criminal investigators from the Food and Drug Administration searched New England Compounding’s offices in October, carting away boxes of documents and other evidence.

“A grand jury has to be convened for a good reason, and usually that means the prosecution is investigating possible crimes or wrongdoing,” said Brad Bailey, a prominent criminal defense lawyer and former prosecutor. “Presumably, the government has some targets in mind.”

But Bailey, a lawyer at the Boston law firm Denner Pellegrino, cautioned that the investigation is probably in the early stages of gathering information and evidence, so it may be some time before any indictments are issued, if at all.

One former salesman for Medical Sales Management said he was interviewed by agents from the Federal Bureau of Investigation for an hour on Friday about the sales and production practices at the companies, including allegations that New England Compounding sold drugs without prescriptions in violation of its pharmacy license.

The worker said that the agents delivered a subpoena for him to testify before a grand jury in federal court in Boston on Wednesday morning and that he understands others have received subpoenas. Another former Medical Sales Management employee said former colleagues had told him they have been called to testify Wednesday as well. Both former workers asked not to be identified to protect their careers.

A third person familiar with the situation confirmed that former workers of the companies have begun receiving subpoenas. This person, who was not authorized to talk publicly about the investigation, and the other sources said the companies are arranging lawyers to represent current and former workers called to testify.

The US attorney’s office and the FBI declined to comment on the grand jury proceedings, which are typically held in secret. New England Compounding’s lawyer, Paul Cirel, could not be reached Friday, but he has previously said it was premature, if not irresponsible, to speculate on the possibility of criminal charges.

So far, 36 people have died and more than 500 people have developed fungal meningitis or other serious infections after receiving steroid shots made by New England Compounding in their backs or joints, according to the Centers for Disease Control and Prevention.

State and federal inspectors have found fungal contamination in numerous vials of the steroid methylprednisolone acetate, and evidence that the company performed insufficient testing before shipping the drugs to clinics and hospitals. Regulators have also accused the company of shipping drugs in bulk without individual prescriptions for each patient — acting more like a manufacturer than a pharmacy — in violation of its state license.

The company has a long history of complaints dating back to 1999, just a year after it was founded. And the Globe reported in October that New England Compounding had recently sent customers a “Quality Assurance Report Card” bragging about the cleanliness of its labs, even while its internal tests — later obtained and made public by the FDA — suggested the opposite.

Prosecutors are expected to focus on three potential charges: fraud; selling tainted drugs in violation of the federal Food, Drug, and Cosmetic Act; or defrauding Medicare or Medicaid. Those crimes potentially carry maximum charges of three to 20 years in prison.

Companies charged with these crimes often settle with the government, agreeing to pay monetary penalties to avoid a possible conviction. But defense lawyers have said given the large number of deaths in this case, prosecutors might seek prison sentences for any executives who are convicted.

The outbreak and government investigations have essentially become a death sentence for New England Compounding. It has shut down its operations, recalled its drugs, surrendered its Massachusetts license, laid off most of its employees, and is facing dozens of lawsuits. A related company with shared owners, Ameridose in Westborough, has temporarily agreed to suspend its operations until the end of the year. And two New England Compounding pharmacists, Barry Cadden and Glenn Chin, have agreed to stop practicing temporarily.

Cadden, the company’s main pharmacist and cofounder, was summoned last month to appear before Congress, but declined to answer questions, citing his Fifth Amendment right to avoid incriminating himself. Cadden’s lawyer declined to say Friday whether Cadden has been asked to testify before the grand jury.

Todd Wallack can be reached at twallack@globe.com. Follow him on Twitter @twallack.
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