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Cantrell Drug Co. finalized an agreement Friday that will allow the compounding pharmacy to resume production but not distribute its products until its Little Rock facility passes a U.S. Food and Drug Administration inspection.

The agreement calls for a two-week stay in the legal proceedings involving the company in U.S. bankruptcy court, at the end of which the company could begin distributing its products or resume the legal proceeding.

"It's not totally resolved," Cantrell Drug's chief executive officer, James D. McCarley, said after the brief hearing before U.S. Bankruptcy Judge Phyllis Jones. "But there is no recall of our product. There is a path forward. The FDA will inspect our facilities and our processes."

McCarley reiterated that the company's troubles with the FDA stemmed from "miscommunication" between company officials and regulators and that the company's products are safe.

"We've treated millions of patients without harm," he said. "We've saved thousands of lives by addressing critical drug shortages."

Cantrell Drug's attorney, Kevin Keech, called the two-week reprieve both "an opportunity" and a "gamble."

The company has an opportunity to resume production and, at some point, perhaps distribution, but with the lull in legal proceedings the company is gambling that the FDA won't use the latest inspection to bolster its case against the company, he said.

"We don't know what the outcome is going to be," Keech said.

The two-page agreement capped three days of proceedings before Jones in a bid by Cantrell Drug to prevent the FDA and U.S. Department of Justice from effectively shutting down the company.

The company sought bankruptcy protection last November to reorganize after an FDA inspection in June, two voluntary product recalls, temporary production shutdowns that upset its finances and continued concerns by the FDA.

The latter resulted in negotiations involving a consent agreement that would have closed the business for a period of time that would jeopardize it as an ongoing concern. After negotiations broke down, the Department of Justice and FDA sued the company last week in U.S. District Court and sought a preliminary injunction to stop the company from producing and distributing its drugs.

Cantrell Drug manufactures and distributes injectable drugs primarily for hospitals. The company can produce, or compound, a range of drugs in individual doses for use in hospitals, which is less expensive than the hospitals compounding the drugs themselves.

Cantrell Drug often focuses on drugs, such as morphine sulphate, that are on the FDA's critical shortage list, which generally means they aren't readily available.

But the company has a checkered history with the FDA, which began heavier scrutiny of the industry after a deadly outbreak of fungal meningitis from compounded drugs provided by a pharmacy in Massachusetts in 2012.

The FDA has inspected the company's facilities three times since 2013, the latest occurring in June 2017, which found several instances of serious deficiencies in its operations that led to unsanitary conditions, poor monitoring of the environment and lack of documentation, all of which called into question the quality and sterility of the drugs it produced.

The complaint, for example, cited Cantrell's environmental monitoring in one of its clean-room areas that detected microbes at levels that would warrant an investigation and corrective action at least a dozen times between January and May 2017.

The contamination consisted of four types of bacteria, including Micrococcus luteus, which is a common bacteria found on human skin but is associated with a variety of illnesses, including meningitis and catheter infections. When found in a sterile setting, it can point to the need for better clean-room management.

In its own news release, the FDA included a statement from its commissioner, Scott Gottlieb, who said "this reckless activity threatens patient safety and will not be tolerated."

That release, in part, was cited by Cantrell Drug's attorneys as playing a large role in the near-collapse of the company's business. The FDA described the release as an alert to health care professionals and patients to avoid using Cantrell Drug products while the agency seeks to stop its production and distribution.

The company says it has since corrected its deficiencies and has retained an expert who was expected to testify that many of the shortcomings found in the inspections were of minimal concern and posed no health risk or chance of contamination of its products.

Steve Weintz, the company's vice president for sales and marketing, said in an email that despite the company's troubles, it had 120,000 orders for its morphine product, was adding a second shift and was going to hire more employees. It employs about 75 now. There were twice as many employees at the beginning of 2017.

In budgets submitted as part of its bankruptcy, Cantrell projected it would have sales of $340,000 per week.

Business on 03/10/2018

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