NECC Files For Bankruptcy Amid Fungal Infection Lawsuits

The compounding pharmacy that sold medications responsible for a deadly fungal infection outbreak, which has caused hundreds of cases of fungal meningitis and dozens of deaths, has filed for bankruptcy amid a growing number of lawsuits filed in courts throughout the United States.

The New England Compounding Center (NECC) filed for Chapter 11 bankruptcy protection on Friday in Boston, indicating that it only has between $1 million and $10 million in assets and liabilities, and between 200 and 999 creditors.

The pharmacy has been shut down since October, when it recalled all of its products after contaminated epidural steroid injections were identified as the source of an outbreak of fungal meningitis and other infections among individuals who received the compounded injections for treatment of back pain.

The epidural steroid injection recall issued in early October affected about 17,000 vials distributed to 23 states. Some government estimates suggest that 14,000 patients in the U.S. were injected with the potentially contaminated vials. An FDA inspection of the company’s Framingham, Massachusetts facility found sealed vials of the drugs with visible fungus floating in them.

According to the most recent update posted by the U.S. Centers for Disease Control and Prevention (CDC), at least 620 cases of fungal meningitis or infection have been confirmed among individuals who received medications compounded by NECC, including 39 deaths.

Mounting Fungal Infection Lawsuits Against NECC

NECC currently faces at least 50 class action lawsuits and individual fungal infection claims brought by individuals throughout the United States who have experienced problems after receiving a recalled epidural steroid injection or other medications that may have been contaminated due to manufacturing practices at the pharmacy.

Product liability lawyers have raised concerns about the available insurance coverage and assets to cover claims against the compounding pharmacy, and the bankruptcy filing does not come as a surprise.

NECC officials have indicated that a compensation fund will be created for victims and that it would be “substantial.”

On January 31, the U.S. Judicial Panel on Multidistrict Litigation (JPML) will hear oral arguments on whether all federal lawsuits over the fungal meningitis outbreak should be consolidated before one judge for coordinated handling as part of an MDL, or multidistrict litigation.

NECC has indicated that they support the formation of an MDL for the litigation, indicating that it expects hundreds of lawsuits to be filed in U.S. District Courts throughout the country in the coming months.

Centralization is designed to help reduce duplicative discovery, avoid conflicting rulings from different judges and to serve the convenience of the witnesses, the parties and the courts.