Ameridose LLC, sister company of the Massachusetts compounding pharmacy whose drugs have been implicated in a national fungal meningitis outbreak, has notified hundreds of workers that they are being laid off beginning Friday, as the company remains under a temporary closure order because of concerns about its sterility practices.
The layoff affects 650 workers at Westborough-based Ameridose, a major supplier of injectable drugs to hospitals nationwide, and 140 at its affiliated marketing company, Medical Sales Management of Framingham. Both companies share owners with New England Compounding Center, the Framingham company that produced steroid injections blamed for 424 cases of fungal meningitis and joint infections and 31 deaths.
“It was the company’s expectation that the suspension of operations would be temporary in nature and that we would be able to fully resume operations in a short time period,” reads a letter going out to workers from Ameridose’s director of human resources, Geri Weinstein.
“While we continue to expect to resume operations, we have now determined that because of the continued inspection by state and federal authorities, it may be necessary to resume operations at a reduced level,” the letter states.
About 200 of the layoffs are expected to be permanent because of the company’s loss of market share during its monthlong closure.
Ameridose agreed to shut down temporarily Oct. 10 to allow investigators time to review its operations, but that closure was extended to Nov. 19 after the Food and Drug Administration said last week that it had found problems with the company’s sterility procedures. The investigation has so far found no contaminated drugs, but it is continuing and the company agreed to recall all its drugs.
The company retained staff to be ready to implement recommendations expected from the FDA and to manage the recall.
Workers were notified about the layoffs by phone Thursday, said an employee at Medical Sales Management, which provided sales and administrative support for Ameridose and New England Compounding. He said he and other workers were told they would continue to be paid through Friday, and some have been asked to return their laptops and other company property then.
New England Compounding has already shut down and laid off almost all its roughly 50 employees, plus dozens of support staff at Medical Sales Management.
The Medical Sales Management worker, who asked not to be named because he was not authorized to speak for the company, said he was particularly upset about the latest layoffs because he thought Ameridose was being unfairly punished for New England Compounding’s safety problems.
Workers said they continued to receive their full salary during the closure. The company is estimated to have spent about $1 million a week on salaries during this time.
The company said in a statement that it continues to work with federal and state inspectors investigating Ameridose.
“We anticipate receiving recommendations from these agencies soon, and responsibly implementing them to meet their concerns,” the statement said. “Our goal is to resume operations at Ameridose as soon as possible and to put these dedicated employees who have been affected by this shutdown back to work.”
The letter sent to employees says that layoffs will begin Friday and will continue until the end of the month.
“In our current circumstances, our business prospects are very difficult to predict, and it is our hope that your layoff will be temporary and that you will be brought back to work,” it said.
“It is very important that you know we are working diligently and cooperatively with our regulators to address any issues they have raised and with the goal of resuming Ameridose’s operations as soon as possible.”
The layoffs are likely to heighten concerns among hospitals, which rely on Ameridose to supply drugs in pre-filled syringes and individual intravenous bags. The company recently estimated it supplies more than 3,000 hospitals nationwide.
The Massachusetts Hospital Association said Thursday: “The company’s cessation of production of important medications aggravates an increasingly serious problem of drug shortages for hospitals. MHA and its hospital members will continue to work with [state health officials] in an effort to address this issue and seek alternative sources of needed medications.”
Correction: Because of a reporting error, an earlier version of this story understated the amount Ameridose LLC is spending on salaries. The company is spending an estimated $1 million per week.