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Pharmacy case may see call for jail time

US prosecutor’s decision awaited

The top executives of New England Compounding Center are likely to be criminally prosecuted on federal charges that carry possible prison sentences, according to former prosecutors who cite the large number of people harmed, allegedly by contaminated steroids made by the Framingham pharmacy.

US Attorney Carmen M. ­Ortiz, whose Boston office is known for aggressive prosecution of health care companies, acknowledged in a statement last month that she is probing New England Compounding, but has declined further comment. Agents from the US Food and Drug Administration’s ­Office of Criminal Investigations were seen last month combing through the company’s Framingham offices.


“If there is a federal charge, there is probably going to be jail time” sought, said Todd Graves, a former Missouri US attorney who in 2002 prosecuted Robert Courtney, a Kansas City pharmacist on several federal counts related to diluting chemotherapy drugs for thousands of ­cancer patients. Courtney, who pleaded guilty, was sentenced to 30 years in jail.

Graves said public outrage at the time bolstered his leverage in the case, a factor he ­believes will give prosecutors an edge this time, too.

“There is a lot of anger and not just among those who are hurt, but anyone who looks at this situation, and judges, juries they are all affected by these types of things,” Graves said. “The wind would be at your back” as a prosecutor appealing to the jury.

Thirty-four deaths have been blamed on pain injections made by New England Compounding, and 490 patients have developed fungal meningitis or other infections after getting the steroid shots in their backs or joints, according to the federal Centers for Disease ­Control and Prevention.

Barry Cadden of the now-closed New England Compounding Center invoked his Fifth Amendment rights against self-incrimination and declined to answer questions.Susan Walsh/Associated Press

Graves and other former federal prosecutors and legal specialists interviewed by the Globe said the US attorney’s ­office is likely to focus on three charges against New England Compounding: selling adulterated (in this case contaminated) drugs in violation of the federal Food, Drug and Cosmetic Act; fraud; and false claims, for defrauding Medicare and ­Medicaid through the company’s sales of medications that were unsafe to thousands of hospitals and pain clinics nation­wide that, in turn, billed the government for treatment of patients insured through these programs.


Penalties for those charges typically range from a maximum of three to 20 years in prison, though federal guidelines allow for a life sentence in cases of health care fraud involv­ing death.

Companies prosecuted ­under these provisions typically reach settlements with the government, agreeing to pay multimillion-dollar fines and to change their practices to comply with the law. Prosecutors are often satisfied with fines because of the difficulty of proving company executives intended to commit a crime, and jury verdicts are unpredictable.

But in this case, the former prosecutors say the government is likely to seek jail time for New England Compounding’s top executives under a seldom-­used provision of the law known as the responsible corporate officer doctrine.

This doctrine allows federal prosecutors to hold a company’s executives criminally respon­sible for wrongdoing of employees, even if the executives did not participate in or know anything about the criminal activity. Conviction carries a maximum one-year prison sentence.

“The government has gone after a lot of big companies and gotten a lot of money, but I don’t think they feel they are having the deterrent effect if people don’t go to jail,” said ­Stephen Huggard, a Boston ­attorney and former federal prosecutor in the Boston US ­attorney’s office.


In 2011, federal prosecutors in Pennsylvania won convictions and jail time for four former Synthes Inc. executives for their roles in the medical-
device maker’s promotion of a bone cement for back surgery. The product was not approved for that use by federal regulators, who had warned about its safety in spine surgeries. Prosecutors said the company did not stop marketing the product until after three elderly patients died in surgery. The executives’ prison sentences ranged from five to nine months.

But last month, the owner of a Texas compounding pharmacy avoided prison, instead receiv­ing probation and a $100,000 fine after pleading guilty to charges involving an overly potent gout drug that led to the deaths of three patients injected with the medication.

The threat of criminal charges led Barry Cadden, co-owner and former managing pharmacist at the now-closed New ­England Compounding Center, to invoke his Fifth Amendment rights against self-incrimination and decline to answer questions last week during a congressional hearing on the outbreak. His attorney, Bruce Singal of Boston, sought immunity from prosecution for ­Cadden in exchange for his testimony, but said he has not heard back from lawmakers.

He said it was irresponsible to speculate on criminal charges against Cadden. “Criminal defense lawyers and former prosecutors . . . should know the perils of speculating on the outcome of a hypothetical criminal case without the benefit of the facts,” Singal said by e-mail.


An attorney for the company’s other principal owner and top officer, Greg Conigliaro, ­declined to comment through a company spokesman. The company’s attorney, Paul Cirel, said in an e-mail that “it is premature, if not irresponsible, to speculate on the likelihood of criminal charges, let alone sentences that might ensue.”

The Globe reported earlier that shortly before the fungal meningitis outbreak was linked to New England Compounding, the company sent customers a “Quality Assurance Report Card” trumpeting the cleanliness of its labs, even as internal tests showed widespread contamination.

Federal regulators investigated New England Compounding a decade ago after ­patients treated with injectable steroids made by the company, including the same medication implicated in the current outbreak, reported health problems. The FDA also sent the company a 2006 warning letter about mass producing drugs and operating like a manufacturer, which state officials have said violated its state license.

Investigators will be seeking these types of documents to demonstrate that company officials knew there were problems yet continued to promote its products as sterile, said Robert M. Thomas Jr., formerly a federal prosecutor in Maryland and now a Boston attorney representing employees in whistleblower cases against their former companies.

“It’s e-mails, it’s warning letters that were received,” said Thomas. “You show knowledge of the risk, you show lower employees telling higher employees of problems. You start with lower-level employees. You may have to give them immunity to talk.”

Kay Lazar can be reached at klazar@globe.com. Follow her on Twitter @GlobeKayLazar.