May 19, 2015 / 6:35 PM / 5 years ago

Pharmacy in 2012 U.S. meningitis outbreak to pay victims $200 million

BOSTON (Reuters) - The now-defunct Massachusetts pharmacy behind a deadly 2012 meningitis outbreak that killed at least 64 people will pay out $200 million to its victims and creditors under a bankruptcy reorganization plan approved on Tuesday.

The New England Compounding Center also sickened about 750 people across the United States three years ago by shipping steroids typically used to treat back pain despite being aware that the drugs were contaminated with fungal meningitis, according to federal prosecutors.

The payout will include about $18 million seized from the Framingham, Massachusetts-based company’s founders and its chief pharmacist, one of two people charged in December with second-degree murder for his role in the scheme.

The bankruptcy reorganization plan was approved by U.S. Bankruptcy Court Judge Henry Boroff.

The company, also known by the acronym NECC, shut down in October 2012 and declared Chapter 11 bankruptcy two months later.

“Victims can never be compensated adequately for the suffering inflicted on them by NECC, but this case does demonstrate how the law, and particularly bankruptcy law, can be used to bring some justice to people seriously injured by a company’s misconduct,” said David Molton, a lawyer who advised NECC’s creditors committee.

The case led to strict new U.S. regulations on compounding pharmacies, which mix drugs but had previously been treated with a lighter hand than registered drug manufacturers. Deaths of patients occurred in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia.

A total of 14 people associated with the company now face criminal charges.

They include pharmacists Barry Cadden, who had a minority ownership stake, and Glenn Chin, who were both charged with murdering 25 people. Others charged include majority owner Carla Conigliaro, her husband Douglas Conigliaro, and his brother Greg Conigliaro, who were each charged with conspiracy.

Cadden, Chin and the three Conigliaros have pleaded not guilty to all charges. A date has not yet been set for their trial in Boston federal court.

NECC, located about 20 miles (32 km) west of Boston, started out as a small business owned by members of Cadden’s family and grew into a bulk-sales company that shipped to hospitals and clinics across the United States. The company generated about $32 million in revenue for the first 10 months of 2012, according to court papers.

Reporting by Scott Malone; Editing by Will Dunham

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