Boston Globe: Charges in pharmacy case indicate US sees crime ring


Federal prosecutors allege that the pharmacists who ran the New England Compounding Center essentially ran the company like a criminal enterprise, engaging in a conspiracy to defraud customers with shoddy work that they knew could lead to deaths, according to several Boston lawyers' legal analysis of the 73-page indictment handed out Wednesday.

By alleging racketeering, the prosecutors say they will show that the licensed pharmacists knew they were violating federal regulations but that they engaged in fraud to aid the goals of their crime ring, the legal analysts said.

Bailey said some of the legal issues raised in the probation department trial, and which are now being appealed, could also be presented in the New England Compounding Center case: Can prosecutors show that people who were part of a corporation were running that corporation like a crime ring?

"It's going to be fact-intensive, and a jury will have to determine whether [prosecutors] do have all the facts to prove racketeering," said Brian Kelly, the former head of the public corruption unit of the US attorney's office in Boston. Kelly now works for Nixon Peabody.

The officials charged Wednesday from New England Compounding Center, or NECC, include executives and supervisory pharmacists who were accused of selling tainted drugs to hospitals, doctors, and patients. Prosecutors said the drugs led to a meningitis outbreak that affected hundreds and killed dozens.

Of the 14 people indicted Wednesday, eight were charged with racketeering conspiracy, meaning they were accused of running NECC as a criminal organization.

To prove that charge, according to legal analysts, prosecutors will have to show that there was an agreement to commit crimes, that the participants knew they were crimes, and that those crimes aided the goals of the criminal organization. The prosecutors would also have to show that there was a pattern of crimes over a period of time.

In the indictment Wednesday, prosecutors allege that the defendants committed fraud by falsely claiming that they followed proper rules and procedures in the process to sterilize pharmaceuticals and falsely claimed that they had tested the drugs to make sure they were properly sterilized.

Specifically, the company was producing a tainted form of a sterile steroid, even though supervisors knew that the process of creating sterile drugs "posed the greatest threat to patients because, among other things, it required compounding personnel to sterilize non-sterile ingredients," according to the indictment.

Two of the defendants face allegations that their crimes resulted in murder.

Bailey questioned whether prosecutors will be able to show that the alleged crimes constituted a conspiracy and said the remaining defendants will work to separate themselves from the murder allegations, saying that being associated with the murder defendants "would result in an unfair trial."

He and other legal analysts noted that some of the charges in the 130-count indictment are not related to the meningitis outbreak. Two executives, for instance, are charged with criminal contempt for violating a bankruptcy judge's order to freeze their assets and for structuring bank transactions to avoid federal detection.

Several other executives and pharmacists are also accused of defrauding the US Food and Drug Administration for claiming they were pharmacists who filled prescriptions, while they were instead working like a drug manufacturer.

A drug manufacturer would be subjected to greater FDA scrutiny.

Kelly said that defense lawyers might seek to have some of the charges separated from the core racketeering case, possibly in a separate trial.

Daniel Medwed, a law professor at Northeastern University, said prosecutors seemed to have ensnared everyone involved, even those to a lesser degree, and he questioned whether all the defendants will go to trial.

He also said that prosecutors appear to be trying to send a message to the defendants and others who work in the health care field with the sweeping indictment that includes charges of murder.

"There is a message they are sending to other organizations and other employees, specifically those working in public care, and the message is, 'you have to tread carefully,' " Medwed said. "If you're producing items that affect the public welfare, you should be held accountable."

Milton J. Valencia can be reached at . Follow him on Twitter