The four primary owners of the pharmacy linked to a deadly U.S. meningitis outbreak that has killed 44 people received at least $16 million in salaries and shareholder distributions in 2012, according to papers filed in U.S. Bankruptcy Court.

New England Compounding Center owner Carla Conigliaro, the largest shareholder in the privately held company, received nearly $9 million in 2012, according to court papers filed late on Friday.

NECC also paid about $18,000 on her American Express card for purchases from gas stations, restaurants, the Apple Store and other places.

Barry Cadden, NECC's chief pharmacist, received about $3.2 million in 2012, filings show. His wife, Lisa Cadden, received about $2.8 million. Greg Conigliaro, a recycling entrepreneur who is Lisa Cadden's brother, received about $1.6 million.

The filings also showed that Framingham, Massachusetts-based NECC had made lease payments for a 2012 BMW X5 and 2011 Mercedes Benz GL-550. NECC paid, for example, $1,251 a month for Carla Conigliaro's Mercedes Benz lease payment, court papers show.

Brown Rudnick LLP, which is representing the official committee of unsecured creditors in NECC's bankruptcy, said NECC had paid more than $21 million to the pharmacy's four primary owners and other insiders.

Medical Sales Management, which shares some common ownership with NECC, received more than $4 million from NECC in 2012, court papers show.

A spokesman for NECC did not return a telephone call seeking comment.

NECC filed for bankruptcy protection last month after U.S. authorities shut down its pharmacy operations amid a meningitis outbreak that has killed 44 people and sickened 678 others, according to the U.S. Centers for Disease Control.

NECC shipped thousands of vials of a fungus-tainted steroid to medical facilities throughout the United States, according to authorities.

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Many of the 13,000 or so people who haven’t been sickened by contaminated pain injections from the pharmacy at the center of the fungal meningitis outbreak may have infections they don’t know about, federal health officials warned on Thursday.

Patients who got steroid injections from one of three contaminated batches should check back with their doctors if they have any symptoms at all, officials with the Centers for Disease Control and Prevention said -- and doctors should consider running magnetic resonance imaging (MRI) scans to check for infections.

Researchers in three of the 19 affected states ran an experiment in which they did MRIs on 128 patients who had not been diagnosed with infections before. They all had new or worsening symptoms such as pain at the injection site. More than half of them -- 52 percent -- had MRI evidence of some type of infection, including abscesses, a type of nerve inflammation called arachnoiditis or even infections of the bone in the spine.

“These findings demonstrate that among patients with no previous evidence of infection, and with new or worsening symptoms at or near the site of their injection, more than 50 percent had findings suggestive of a localized spinal or paraspinal infection,” CDC wrote in a health alert sent to doctors.

The outbreak of fungal meningitis has made at least 620 people sick and killed 39 of them, and CDC says to expect more infections. It’s been traced to a single pharmacy, the New England Compounding Center (NECC) in Framingham, Mass. The pharmacy has been closed and all of its products recalled, but the crisis has prompted a Congressional investigation of how regulators allowed NECC to continue operating.

The Food and Drug Administration says its inspectors have found unsterile conditions and many contaminated products at NECC and has asked for wider regulatory powers for policing such pharmacies.

NECC distributed its products far more widely than it was licensed to, and officials say more than 75 clinics in 23 states got some of the contaminated steroids. Close to 14,000 people received contaminated injections.

Of the 620 who have been infected, 367 had meningitis, a dangerous and often deadly inflammation of the coating that protects the brain and spinal cord. Another 250 have local infections of the spine or the joints where they were injected, such as the ankles or shoulder. All will require weeks or months of treatment with strong antifungal drugs.

Because treatment is so harsh, CDC has held off on saying everyone who got an injection should be treated just to be safe. And CDC’s been conservative on recommending scans to see if there’s an infection that isn’t causing obvious symptoms, in part because MRIs are expensive and often difficult for patients to schedule.

But anyone who has pain or other symptoms should go back to the doctor, CDC now advises.

“CDC is recommending that clinicians should consider obtaining an MRI with contrast of the injection site in patients with persistent but baseline symptoms because the presentation of these spinal or paraspinal infections can be subtle,” the alert says.

“Some patients who received spinal or paraspinal injections with implicated MPA from NECC may currently have an unrecognized, localized spinal or paraspinal infection. CDC is therefore re-emphasizing the need for clinicians to remain vigilant for evidence of fungal infection in these patients.”

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Centers for Disease Control and Prevention

CDC officials meet at the beginning of the outbreak of fungal meningitis, which has now killed 39 people and made more than 600 ill.

A single phone call from a North Carolina clinic gave a Centers for Disease Control and Prevention investigator the heads up she needed to realize that an outbreak of fungal meningitis, which has now killed 39 people and made 620 sick, was likely going to be a national emergency.

The CDC published its first account on Wednesday of how state and federal investigators have handled the outbreak, and the agency warns the trouble is still not over. The report, published in the New England Journal of Medicine, describes how doctors, public health officials and clinic workers raced to track down patients at risk from lots of contaminated pain medication.

Dr. Rachel Smith had only been working at the CDC’s  fungal diseases branch for a year and a half when the reports came in last September about a patient at a Tennessee pain clinic who had a very unusual type of meningitis, apparently caused by a fungus. Dr. April Pettit, an infectious disease expert at Vanderbilt University who treated the patient,  had notified the Tennessee Department of Health, which in turn notified CDC.

There was a chance the contamination was a local problem, perhaps from dirty needles at the one clinic.

“We were certainly worried this could be a bigger issue but wanted to do due diligence,” Smith told NBC News in a telephone interview.

They’d already figured out that steroid injections might have been the source of the contamination and started calling pain clinics that may also have bought drugs from the same source: the New England Compounding Center in Framingham, Mass.

They asked the clinics to keep an eye out for patients with symptoms of fungal meningitis, such as headache, fever and pain where they got the injection. At some places, including the North Carolina clinic, Smith had to navigate layers of receptionists and she left multiple voicemails and messages.

“I still remember getting this call back from North Carolina,” Smith said. “They called me like three or four times, trying to get through because they no idea what this woman had, and when I called and said, ‘Hey do you have anyone with these symptoms?’ they said ‘Oh my god. That is what this woman has.'”

The next day, CDC officials started calling and emailing all 50 states. “It was really that one patient who turned the whole thinking about this outbreak,” Smith said.

And what made the CDC extra vigilant about the first few cases was the fact that NECC, the source of the steroids, was a compounding pharmacy. “Compounding pharmacies and compounded products had been the source of other outbreaks. When we saw this drug had been compounded we were a little more worried about it,” Smith said.

Since then, the Food and Drug Administration has found several batches of drugs made by NECC were contaminated with several species of fungus and bacteria. Inspections showed the pharmacy, which has since been closed, was filthy. Congress is investigating how FDA and state regulators allowed the pharmacy to operate far beyond its license, and the FDA is proposing new ways to regulate these companies.

The CDC’s report says it’s essential to make sure that drugs distributed by compounding pharmacies are clean.

“This outbreak shows that we need to make sure that drugs that are used for sterile injections are safe and uncontaminated,” Smith says. “The public has trust in us as public health officials and in the health system as a whole to deliver safe health care.”

Quick action by the public health system likely saved lives, said Smith. In other outbreaks of fungal infections the death rate has been around 40 percent. In this one, although as many as 14,000 people may have been injected with contaminated products, only 6 percent of those who were infected have died.

Without the alerts and publicity, many people may never have known why they were sick. For some patients, the first sign that something was seriously wrong was a stroke. Most had only vague symptoms -- headache, sometimes a fever, and sometimes pain where they were injected.

“Anecdotal data collected during the first week of the outbreak indicated that many of the initial patients had mild-to-moderate symptoms that ordinarily would not have prompted urgent medical evaluation,” the CDC report reads.

“We are still seeing cases and it’s not over yet,” Smith cautioned.

Now, more people are turning up with localized infections such as abscesses at the point of injection. But these can become very serious as the fungus works its way into tissue and even bone, where it is very hard to eradicate using antifungal drugs. Victims will have to take the drugs for weeks or months, and the antifungal medications themselves can damage the liver or kidneys.

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By Julie Appleby, Kaiser Health News

When a brand-name drug to help prevent premature births was approved last year, its $1,500-a-dose-price alarmed state and private sector insurance officials.

Many restricted use of the FDA-approved Makena in favor of $20- to $40-a-dose versions that had been made for years by pharmacies, saying that would give more women access to the treatment. Federal officials, sympathetic to such arguments, allowed the pharmacies to continue making the unapproved drugs.

But those decisions are now getting a second look following a deadly meningitis outbreak linked to a different pharmacy-made drug that has sickened hundreds of people and killed at least 28. No one has been reported injured by the pregnancy drug knockoffs. But the judgments made about Makena offer a window into the difficult tradeoffs between cost, safety and access sometimes confronted by policymakers and insurers at a time of growing angst over drug prices.

They also highlight the increased role of these pharmacies, some of which have begun to function as de facto drug manufacturers mass producing treatments for asthma, menopause and pain, among other conditions, but with far less oversight. 

Vials of a compounded version of the injectable pregnancy drug were among the dozens of products recalled by the now-shuttered New England Compounding Center (NECC) in Framingham, Mass., believed to be the source of the fungus-contaminated steroids linked to the meningitis outbreak. Experts say contracting meningitis from the pregnancy drug is unlikely because it’s administered into muscle, not the spine. But a contaminated dose “could cause a local infection,” said Centers for Disease Control and Prevention spokesman Curtis Allen.

More significantly, potency problems might make the drug less effective in preventing a premature birth.

Earlier this year, the FDA investigated complaints by the brand name drugmaker, KV Pharmaceutical, about the quality of some pharmacy-made products. Testing a small number of samples, the agency said in June that a few failed potency tests, but there were no “major safety problems.” At the same time, it advised that “approved drug products, such as Makena, provide a greater assurance of safety and effectiveness than do compounded products.”

That didn’t shake the faith of at least a half dozen state Medicaid programs and some large private insurers, which continue to pay for the less expensive compounds. 

Alabama Medicaid officials say they had “not one problem” with the pharmacy-made versions, although they recently began covering Makena after getting deeper discounts from the drugmaker, said Kelli Littlejohn, director of clinical services and support for the state’s Medicaid program.

Neither the federal agency that oversees state Medicaid programs, the state Medicaid directors association, the drug manufacturer or doctors’ groups could say how many state programs restrict access to the FDA-approved drug.

Backlash Over Makena’s Price

Up to 150,000 women in the U.S., at risk of having a repeat pre-term delivery, may be prescribed Makena or the pharmacy-made versions of the progesterone drug. The drug does not prevent premature birth in all those who take it. Tests leading to Makena’s approval found that 37 of 100 women taking Makena still delivered prematurely. But that was an improvement over the control group. Of the 100 women not given the drug, 55 gave birth early.

KV, which did not develop the drug, purchased legal rights to it from another firm for nearly $200 million, and won market exclusivity for seven years. It assumed state Medicaid programs -- and private insurers -- would cover the FDA-approved version and that it would soon recoup its investment.

Almost immediately, however, the drug’s price, called “outlandish” by a March of Dimes official, provoked indignation from doctors’ groups and congressional calls for investigation. In late March, the federal Centers for Medicare and Medicaid Services advised state Medicaid programs that they could continue to pay for the cheaper versions of the drug, which have been available since about 2003. The agency did not return calls seeking comment.

On that same day, the FDA issued what many observers saw as an unusual statement, saying that “to support access to this important drug, at this time and under this unique situation,” it would not take enforcement action against pharmacies that properly and safely made similar versions of the drug.

In the past, the FDA had sent warning letters or pursued other action against pharmacies when it could show they were mass producing copies of FDA-approved drugs.

“The FDA does not usually recommend that patients use compounded versions of FDA-approved drugs,” pharmacists Yesha Patel and Martha Rumore say in an article in the July issue of P&T, a journal aimed at physicians, insurers, hospitals and others developing drug coverage policies. 

Pharmacists who mix or "compound" drug formulations are allowed to make formulations for individual patients who can't use traditional drugs, but not to mass produce compounds. They are generally overseen by state regulators, not the FDA.

Not long after the FDA statement, financially beleaguered KV lowered its price for Makena to $690 a dose -- bringing the total cost to about $14,490 for a woman who needs 21 doses. For some Medicaid programs, that was still too much.

‘Out of Reach’

“Even at this price, it remains out of reach for state Medicaid programs and the women they cover,” Louisiana Medicaid leaders wrote in a letter to health care providers in April 2011. By covering the pharmacy-made version, they could ensure that more women would receive the treatment, reducing the number of pre-term births in the state. Health officials estimated that a premature baby cost the state Medicaid program $33,433 in the first year of life, versus $3,671 for a full-term infant.

Louisiana still requires doctors to get special approval to prescribe Makena.

Similarly, Texas doctors must show there is no pharmacy able to make or deliver the drug to their offices to get coverage. That policy is now under review, a spokeswoman said.

Before Kentucky doctors may use Makena, Medicaid requires them to show that a woman has had a bad reaction to the compounded version – or had previously tried it and delivered prematurely.

Doctors in Wisconsin must explain why a woman might have trouble with a compounded drug, while doctors in South Carolina must show medical necessity for the branded drug.

“Some of these policies are a little more subtle than others,” said Scott E. Goedeke, a senior vice president with Ther-Rx, KV’s marketing subsidiary. “But they have similar effects: Physicians who want to prescribe the FDA-approved Makena learn from experience that process is so difficult or prohibitive they may stop trying.”

Blaming those policies for its financial troubles – along with what it describes as the FDA’s failure to enforce its market exclusivity for Makena – KV has filed lawsuits against Illinois, South Carolina and Georgia, alleging that the rules expose Medicaid patients to “unapproved compounded versions … of uncertain quality.”

The company won a preliminary injunction against Georgia to keep it from enforcing the coverage rules. In August it filed for Chapter 11 bankruptcy protection, a month before its lawsuit against the FDA was dismissed.

Cheaper Versions Favored By Private Insurers

Insurers covering the private market, meanwhile, have a range of rules around the use of Makena. UnitedHealthcare, one of the nation’s largest insurers, says in a policy document that it “continues to support the use of compounded, preservative-free” versions of the drug through “local and national… pharmacies.” However, it also reimburses doctors who choose to prescribe Makena.

Cigna covers Makena, as well as the compounded drugs, according to an April 2012 policy document.

Still, some physicians may feel pressure to prescribe the cheaper versions even when the insurer says it will pay for the brand name drug.

“Most insurance companies say they cover Makena, but they also send letters advising us that in trying to keep down the cost of health care, we are strongly encouraged to use the cheaper alternative, which is the compounded drug,” said Michael Randell, an obstetrician/gynecologist in Atlanta. “Sometimes we can feel forced to comply with wishes of insurance companies, or they might retaliate and take us off their plan.”

Because Makena contains the same active ingredient, hydroxyprogesterone caproate, as the pharmacy-made drugs, there is little debate over whether the drugs are similarly effective – assuming the compounded version contains active ingredients that are mixed at the correct potency and under sterile conditions.

But as the investigation of NECC demonstrates, potency and purity problems have arisen with pharmacy-made drugs. Oversight of pharmacies is inconsistent at best.

A report this week by Massachusetts Rep. Edward Markey, a Democrat, described the unsanitary conditions there as “just the tip of an industry iceberg that has long needed reform and federal oversight.”

Last week, KV filed a complaint with the U.S. International Trade Commission alleging that the New England center and other pharmacies use active ingredients imported from Chinese factories that are not routinely inspected by the FDA.

Patient advocate Amy Allina at the National Women's Health Network in Washington D.C. puts the blame on KV for overpricing Makena, but believes pharmacies making compounded medications need more oversight.

Noting that regulations follow “tragedies where people die,” she predicted the meningitis fatalities “could be the turning point for compounding pharmacies.”

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

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By Greg McCune, Reuters

The number of cases of meningitis from tainted injections of a steroid medication reached 294, up 12 from a day earlier, the Centers for Disease Control and Prevention (CDC) said on Monday.

There were three other cases of joint infections from the steroid medication that have not resulted in meningitis cases, bringing the national total of infections to 297, according to the CDC.

There were no new deaths reported, leaving the total number of fatalities at 23, the CDC said. The number of cases has continued to mount despite recall of the product by New England Compounding Center. Meningitis cases have been identified in 16 states and deaths in seven states.

Two more deaths tied to fungal meningitis

Experts: Many ways for fungi to taint drugs

A single compounding pharmacy, one that mixes up drugs to order, appears to be the source of contamination that has killed 12 people and made more than 100 sick with a rare form of fungal meningitis. Some consumer advocates want the Food and Drug Administration to crack down harder on such pharmacies, but the legal battle to regulate them has been long and convoluted.

The question is whether the New England Compounding Center, which made and sold the contaminated steroids blamed for the outbreak of rare fungal meningitis, is truly a legal compounding pharmacy, or an illegal drug manufacturer. NECC has voluntarily closed and recalled all of its drugs. Reuters reported on Wednesday that a second pharmacy, Ameridose LLC, which shares common ownership with NECC, plans to shut down voluntarily for a week as a precaution.

So-called compounding pharmacies are frequently at the center of controversy. They’ve been heroes to advocates of “bioidentical” hormones such as actress Suzanne Somers, who sells her own books, DVDs and blogs promoting the idea. Professional medical associations including the Endocrine Society and American College of Obstetricians and Gynecologists say these individually mixed hormone remedies are bogus.

“One of the big problems is that we just don't know what risks are associated with these so-called 'bio-identicals’,” said the FDA’s Steve Silverman. 

The pharmacies were also folk heroes for a while in a battle over a drug that prevents preterm births. It’s a synthetic form of the hormone progesterone called hydroxyprogesterone caproate. Compounding pharmacists can make it for just a few dollars a dose, or about $400 per pregnancy. Then KV Pharmaceutical of St. Louis came up with an FDA-approved version last year and priced it at $1,500 a dose – dropping that to $690 a dose after a prolonged outcry, but still nearly $14,000 to preserve a pregnancy to term.

The FDA sat on the fence for a while, but eventually chased down some pharmacies making compounded versions. “We are writing to ensure that Wedgewood Pharmacy is not operating under the misimpression that there is a ‘green light’ to compound large volumes of copies of Makena,” FDA told the president of one New Jersey compounding pharmacy last June. FDA said its main concern is that the products sold aren’t contaminated, and that they actually work safely.

Compounding pharmacies can also step in when there’s a shortage of a vital drug.

Under the FDA’s definition, compounding pharmacists are supposed to mix drugs to order only on an individual basis in response to a prescription from a doctor. For instance, if a child is allergic to one of the inactive ingredients in a pill, or if a medicine tastes bad, a compounding pharmacist can remix the product to make it safe or palatable.

Under this definition, the New England Compounding Center was not operating as the FDA prescribes. State pharmacy boards are supposed to regulate this activity but the FDA can step in when there’s contamination, as in this case, or when the agency believes pharmacies are breaking the legal limits.

The consumer group Public Citizen says FDA failed this time. “The large-scale production of a drug -- in this case, a drug that is intended to be sterile and injected into patients -- appears to have crossed the line from the traditionally narrow role filled by local compounding pharmacies into one that clearly involves drug manufacturing and the release of products into interstate commerce,” Dr. Michael Carome, Deputy Director of Public Citizen’s Health Research Group, says in a statement. NECC’s  products, now recalled, were distributed to pain clinics in at least 23 states.

"However, the FDA failed to take action to ensure that the New England Compounding Center adhered to these drug standards, which are essential for protecting the health of patients.”

Members of Congress are paying attention, too. Reps. Ed  Markey, a Massachusetts Democrat, and Rosa DeLauro, a Connecticut Democrat, say they intend to introduce legislation that would more closely regulate these pharmacies. They can’t do anything without Republican support – the House is controlled by Republicans – but the Republican-led Energy and Commerce Committee says it will call in the FDA and the Centers for Disease Control and Prevention for a hearing this week. 

“These compounding pharmacies are operating as factories, mass-producing and packaging specialized new drugs in large quantities and then sending them over state lines,” Markey says. “These compounding pharmacies are compounding risk -producing complex drugs in bulk and then distributing them across the country. Unfortunately, compounding pharmacies are a 19th century service operating in a 21st century industry, and we need to update and strengthen the rules that govern these operations so that patients can safely benefit from the unique service they offer.”

Congress tried to strengthen FDA oversight of compounding pharmacies in 1997, but the law fell apart under challenge.  It prohibited the pharmacies from advertising, something that the Supreme Court ruled was unconstitutional. Jonathan Berman of the law firm Jones, Day says the status of the remainder of the law is unclear now. “Nobody knows whether that law is valid or not,” Berman said in a telephone interview.

He thinks the Supreme Court could and would make a ruling – if someone would bring an appropriate case. "The question is whether there will be another case that presents the same issue.  The government hasn't brought many cases against compounding pharmacies," Berman said.

Despite the absence of clear rules, Berman says, some compounding pharmacies have grown much larger. "More and more these days you see pharmacies trying to fill a niche by compounding large quantities,” he said. They should have a lawful way of doing business, because what they do is important.”

While the NECC could argue that it was filling a shortage, the FDA denies it. The drug doctors believe was to blame is called methylprednisolone, a steroid injected into the back for pain.  “There are FDA approved versions of methylprednisolone acetate injection on the market, available with or without preservatives,” the FDA says in a statement. “FDA’s drug shortage office has confirmed that NECC’s voluntary shutdown will not affect the nationwide supply of methylprednisolone acetate.”

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