NECC owners agree to pay meningitis victims $70M, insurers kick in $25M

The saga of New England Compounding Center (NECC), the compounder tied to a nationwide fungal meningitis outbreak and a revamp of FDA powers, may be nearing its end. The owners of the bankrupt NECC have reached a settlement agreement with insurers that could provide about $100 million for the hundreds of victims and their families.

The owners will contribute $47.75 million and $20 million in tax refunds and insurers are kicking in $25 million, according to BusinessWeek. Lawyers said the agreement, which would release the NECC owners from further claims, still needs approval from a federal bankruptcy judge but would provide "meaningful compensation" for the victims and their families.

The outbreak, tied to tainted steroid products manufactured by the large compounding company, started in 2012 and sickened more than 750 people, killing 64 before running its course. It also drew attention to a new breed of compounding pharmacy, not the small operation that had made custom drugs for doctors, but companies that were more like smalll-scale manufacturers, making lots of different products and selling them nationwide. It also raised questions about whether state regulators, who traditionally oversaw the industry, were equipped to keep track of these new players.

The public outcry from the outbreak resulted in Congress last fall passing the Drug Quality and Security Act, which gives the FDA new, but limited, powers to oversee compounding pharmacies that volunteer to be regulated. Lawmakers called the FDA on the carpet for not preventing the outbreak but then declined to give it the new powers it said were needed. Instead, Congress compromised on a plan to let the market weed out bad operators. The idea is that hospitals will choose to do business with those compounders that volunteer to be regulated and meet FDA standards. So far about 40 of the thousands of compounders in the U.S. have signed up for FDA regulation.

- read the BusinessWeek story
- here's the FDA list of registered compounders