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REUTERS

Settlement over meningitis outbreak awaits judge's approval

May 7, 2014 - 10:42am


(Reuters) — The trustee overseeing the bankruptcy of a Massachusetts pharmacy linked to a 2012 meningitis outbreak that killed 64 people asked a judge on Tuesday to approve a settlement that would pay out $100 million to victims, families and creditors.

The deal calls for the owners of the New England Compounding Center, which produced a tainted steroid that sickened more than 700 people in 20 states, to contribute $50 million to a fund intended to settle hundreds of lawsuits filed against the company after the outbreak.

The balance of the funds will come from insurers and the potential sale of another company owned by NECC's investors.

"This is a good recovery given the reality of the bankruptcy, but it isn't nearly enough to make up for all that the victims and their loved ones have suffered," said Kristen Johnson, an attorney at law firm Hagens Berman Sobol Shapiro L.L.P. who took the lead in representing the plaintiffs that sued NECC.

If the deal is approved by U.S. Bankruptcy Court Judge Henry Boroff, plaintiffs could receive payments as early as next year, plaintiffs attorneys said.

The Framingham, Massachusetts-based company shut down in October 2012 after authorities linked it to the worst outbreak of fungal meningitis in U.S. history, the result of drugs it shipped to health providers across the country to be used on patients that suffered back pain. The company filed for bankruptcy two months later.

The outbreak prompted national legislation to tighten control of custom medication makers, which have played an increasingly large role over the past two decades in producing medications. Pharmacies had not been subject to the same level of regulatory scrutiny as drug manufacturers.

The deal was first reached in December but had not been filed in court until Tuesday.

Attorneys for the pharmacy's owners could not be reached for immediate comment.

 



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