Drug & Device News

Invoking his Fifth Amendment right against self-incrimination, Barry Cadden, one of the founders of the New England Compounding Center (NECC), declined to testify on Nov. 14, 2012, before the Congressional House Energy and Commerce oversight subcommittee. Cadden's silence was not unexpected, as NECC is accused of running an unsanitary operation that contaminated its steroid injection pharmaceutical products, which then were administered to patients. At least 39 people have died as a result, and hundreds more have been sickened.

A week later, Judge Dennis Saylor of the U.S. District Court for the District of Massachusetts entertained motions seeking pre-judgment attachment of NECC's assets, brought by the plaintiffs in two purported class actions (Cole v. New England Compounding Pharmacy Inc. and Erkan v. New England Compounding Pharmacy Inc.). Plaintiff Robert Cole and plaintiff Michelle Erkan asked the court to attach up to $461 million belonging to NECC and to related companies and individuals (including Barry Cadden), noting that although class certification is not usually granted in personal injury cases, this case might warrant a class-action designation as a “limited fund” case. This type of class action allows courts to distribute damages fairly to a group of plaintiffs when the defendant's assets are inadequate to cover everyone's losses. The plaintiffs' attorney, Thomas Sobol, a partner in the Boston office of Seattle-based Hagens Berman Sobol Shapiro, urged the court to attach the defendants' assets because “these rare circumstances cry out for this court to do something in the short term to protect the status quo.” That plea was heard, and Judge Saylor ordered $5 million in assets attached, although they will remain in the physical custody of the defendants and may continue to be used to conduct ordinary business. They may not be sold or transferred to new owners, however, and dividend payments to stockholders of NECC may not be made.