Compounding Pharmacy Crackdown to Go Nationwide, Ruggio Predicts

LeClairRyan attorney says officials in several states—not just Massachusetts and New Jersey—are ramping up scrutiny of compounding pharmacies in the wake of a deadly fungal meningitis outbreak.

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Washington, DC (PRWEB) February 12, 2013

The proposed regulatory crackdown on compounding pharmacies is by no means limited to the legislatures of Massachusetts and New Jersey—indeed, officials in several states are ramping up scrutiny of compounding pharmacies in the wake of a deadly meningitis outbreak linked to a New England company, warned the leader of LeClairRyan’s Compounding Pharmacy Investigation and Litigation team.

“Our team has already received calls from compounding pharmacies in states such as Colorado, Minnesota and Pennsylvania,” explained veteran healthcare industry attorney Michael F. Ruggio, a shareholder in the national law firm’s Washington office. “They are receiving warning letters from their state boards of pharmacies. The takeaway here is clear: The meningitis outbreak amounts to a game-changer for compounding pharmacies everywhere; this sector will never be the same.”

According to The Centers for Disease Control and Prevention (CDC), the fungal meningitis outbreak last October has led to 45 deaths and a total of 696 illnesses around the country (http://www.cdc.gov/hai/outbreaks/meningitis-map-large.html). The outbreak has been blamed on allegedly contaminated vials of steroids shipped to 75 healthcare sites in 23 states (http://www.cdc.gov/media/releases/2012/p10_05_meningitis_outbreak.html). LeClairRyan’s Compounding Pharmacy Investigation and Litigation team now represents a New England compounding pharmacy in question. The rash of deadly illnesses sparked pending legislation in Massachusetts and New Jersey, as well as calls for tighter regulation of the sector by the U.S. Food and Drug Administration.

These specialty pharmacies have always faced the challenge of complying with both federal rules and the widely varying regulations of individual states, noted Ruggio. Today, however, compounding pharmacies should reevaluate their risk profiles, growth prospects and overall business models amid heightened scrutiny that is sure to continue, he advised.

“Because compounding pharmacies can be lucrative, it is not unusual for conventional pharmacies to attempt to pursue this line of business,” Ruggio said. “As a result of the outbreak, however, this is going to become far more difficult to accomplish. States are going to be rolling out new hoops and hurdles related to licensure, and the federal government might well end up subjecting compounding pharmacies to the stringent regulations that now apply to mainstream pharmaceutical companies, radically altering the cost-benefit analysis.”

Massachusetts and other states could pass whistleblower protections that compounding pharmacies have never had to deal with before, the former federal prosecutor noted. Likewise, the sector will in all likelihood face tough new fines and penalties for specific safety violations. “It is going to be a massive change going forward, regardless of whether your state legislature adopts new laws,” Ruggio predicted. “It is also likely that, in cases of reckless disregard or intentional negligence, criminal penalties will become a part of the regulatory picture. Compounding pharmacies will not just have civil exposure, then, but criminal as well.”

These changes could have widespread consequences for the overall healthcare system, Ruggio added. “Remember, compounding pharmacies serve a big purpose. For those people who have allergies and sensitivities with regard to some mainline drugs, these companies can literally be a lifeline,” he said. “Typically, these are not massive pharmaceutical companies. Excessive regulation could drive a lot of them out of business. Alternately, it could drive the costs of their products too high, adding yet another burden to our already overburdened healthcare system.”

Thus, compounding pharmacies would do well to defend their legitimate business interests as new rules are being crafted, Ruggio said. “At the very least, these businesses should seek to partner with regulators and state officials to make sure that any new rules are reasonable and fair and that they actually improve safety,” he advised.

About LeClairRyan
LeClairRyan provides business counsel and client representation in corporate law and litigation. With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm has approximately 350 attorneys representing a wide variety of clients throughout the nation. For more information about LeClairRyan, visit http://www.leclairryan.com.

Press Contacts: At Parness & Associates Public Relations, Marty Gitlin (631) 765-8519, or Bill Parness, (732) 290-0121, parnespr(at)optonline(dot)net


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