Lethal medicine linked to meningitis outbreak

The following script is from "Lethal Medicine" which aired on March 10, 2013, and was rebroadcast on Aug. 11, 2013. Scott Pelley is the correspondent. Michael Radutzky, Oriana Zill de Granados and Michael Rey, producers.

Last fall, 17,000 vials of a steroid were shipped to clinics and hospitals in 23 states. The drug had to be sterile because patients would have it injected into their joints or into their spines to relieve chronic pain. What happened next is the worst pharmaceutical disaster in decades.

The steroid was contaminated with fungus. More than 50 people have died, and around 700 are being treated for persistent fungal infections. The tragedy has exposed a failure in drug safety. And, in a moment, you will hear the commissioner of the FDA acknowledge that she can no longer guarantee the safety of many high risk drugs.

The steroid was produced by New England Compounding Center and in the six months since the first deaths, no one at New England Compounding had ever revealed what happened. But they did when we first aired this story last March. As for the victims, this has been an unrelenting horror after just one injection of lethal medicine.

Julie Otto: I've been in the hospital seven times, total of 75 days. I've missed Thanksgiving and Christmas and my son's birthday.

Julie Otto is one of 13 injured patients who met us at St. Joseph Mercy Hospital outside Detroit.

Willard Mazure: I'm on 60 milligrams of morphine a day with no cure in sight. There is no cure in sight for me.

Willard Mazure's morphine is to kill the pain from the fungal infection. We asked the patients to sit down in the first two rows and many of them brought family to the auditorium. Michigan is a hotspot for the toxic steroid, one of 23 states that received the drug from Massachusetts. St. Joseph Mercy has treated 189 patients -- all of whom endure brutal anti-fungal drugs.

Willard Mazure: The medicine is just unbearable. You know, they talk about cancer treatments, and I'm sure they're unbearable too. But this is some unbearable stuff.

This is the fungus. It is a sample that has been grown from the spinal fluid of a patient. The fungus is a form of mold that attacks bone and nerves. The patients who had it injected in the spine have an infection called meningitis which can also reach the brain.

Scott Pelley: Have the doctors told any of you that the fungus is gone and you never have to worry about it again?

Voices: No. Absolutely not. No.

The steroid, methylprednisolone acetate, made by New England Compounding Center, known as NECC, came from this industrial park near Boston which houses the pharmacy and an outfit that recycles construction debris -- both owned by the family of Barry Cadden, a pharmacist, and president of NECC.

Cadden's New England Compounding Center was what's known as a compounding pharmacy. By law, compounding pharmacies are not allowed to manufacture pharmaceuticals for the mass market. That would require the oversight of the FDA. Instead, states license compounding pharmacies to make drugs for individuals. For example, a doctor might order a liquid form of a medication for a patient who can't swallow a pill. Compounding pharmacies are bound by one rule: they must have a prescription for each individual patient.

But NECC was shipping tens of thousands of vials from its lab called Clean Room One. Investigators shot video inside NECC. This is the first time the public has seen it. And this is the first interview with a technician from Clean Room One.

Joe Connolly: The underlying factor is that the company got greedy and overextended and we got sloppy, and something happened.

Joe Connolly started in Clean Room One in 2009. He remembers, in 2011, a salesman came by with a boast and a warning.

Joe Connolly: He was walking through and says, "Oh, I got-- I got a bunch of stuff coming for you guys. You guys are gonna be busy. You're gonna-- I'm gonna keep you guys movin'." And that just meant compound it, process it, get it out the door.

Connolly says, over months, the lab was overwhelmed with orders. Output of drugs that he made increased by a factor of 1,000.

Joe Connolly: We became a manufacturer overnight. So we were basically trying to have the best of both worlds. It was trying to manufacture without the oversight of a manufacturer. And it was just, we all got overtaxed and everything.

Which made it harder, he says, to follow the strict procedures that kept drug preparation sterile.

Scott Pelley: They would occasionally find mold in the clean room?

Joe Connolly: Occasionally. Yes.

Scott Pelley: How often?

Joe Connolly: I would say maybe a dozen times in three years we would find it.

He told us they would clean up and keep moving. But a month before the first steroid death, he says he warned his supervisor.

Joe Connolly: Something's going to happen. Something's going to get missed. And we're going to get shutdown.

Scott Pelley: What did you mean by that?

Joe Connolly: We were going to hurt a patient. We were just thinking-- hurt a patient. We weren't compounding anymore, we were manufacturing.

Scott Pelley: When you went to your supervisor and told him that, he said what?

Joe Connolly: That's verbatim. He shrugged. That was his response for a lot of our questions or comments or concerns, was a shrug.

Scott Pelley: Meaning?

Joe Connolly: Just do it. He'd-- either he didn't care, or he was powerless to change it.

NECC was growing explosively and so was the compounding industry. It started in 1998 when Congress exempted compounding pharmacies from the oversight of the Food and Drug Administration. The theory was, mixing drugs one prescription at a time shouldn't require federal inspection. The law passed, over the strong objections of then-FDA Commissioner David Kessler.

Scott Pelley: You as FDA commissioner testified before them and you said, "Don't do this."

David Kessler: If you're not going to have oversight, one day people are going to die.

Scott Pelley: That day's arrived.

David Kessler: This should not happen in 2013. Maybe at the turn of the previous century where we didn't have institutions like the FDA. There is no reason why people had to die.

Without FDA supervision compounding took off. State health departments are responsible for regulating what is now nearly a $2 billion industry. Dr. Margaret Hamburg is FDA commissioner now and she told us, because of the 1998 law, she doesn't know how many compounders there are or what they're making.

Scott Pelley: You know, I can just hear the folks at home saying, "Wait a minute. I thought every pharmaceutical drug in this country was approved by the FDA." And you seem to be telling me in this interview that that's not the case?

Margaret Hamburg: Well, compounded drugs are not FDA approved.

Scott Pelley: So if a patient goes into a clinic and the doctor or the nurse pulls out a vial of something, that patient has no way to know whether that drug has been approved by the FDA or not?

Margaret Hamburg: Well, I think that's right under the current system. And what I think emerged in the meningitis outbreak was that many patients and their health care providers didn't realize that they in fact were using a compounded product.

Scott Pelley: As commissioner of the FDA then you can't tell us sitting here now that every drug being used in the United States is safe and effective?

Margaret Hamburg: No. I really cannot.

It was up to the Massachusetts Board of Pharmacy to inspect NECC. Records show occasional problems with sterility. But the pharmacy passed a board inspection in 2011. Still there is no indication that the state fully realized how big and dangerous NECC had become. This is an NECC salesman, speaking for the first time. And we were surprised when he told us how many hospitals and clinics were clients.

Salesman: Close to 3,000, I'd say.

Scott Pelley: Three thousand clients, all across the country?

Salesman: Yeah.

The salesman asked us to disguise him and not use his name. He fears the connection to NECC will ruin his career. He left NECC a year before the steroid disaster. He says he was replaced by a competing salesman. He told us that many of NECC's clients were in on a fraud at the heart of the company's growth. The law required NECC to have a name on a prescription so clinics provided names -- any names.

Salesman: Bart Simpson, Homer Simpson, that we-- those ones did raise red flags, and we told to call our client back, and say, "Hey, give us different names." The follow-up names would be like a John Doe, Jane Doe, Bill Doe, you know, Jane Smith, Bill Smith, et cetera.

Scott Pelley: These weren't real people?

Salesman: As far as I know. I mean, how many Jane Does and John Does do you know? I mean--

Scott Pelley: And when you got the prescriptions with Bart Simpson's name, and Homer Simpson's name you went back to that client and said what?

Salesman: Can you please, you know, give us legitimate names, or people that you know? Sometimes they'd take a phone directory within their office, and scribble out their extensions, and fax it over to us.

Scott Pelley: It's obvious what was going on, and it was obvious to them?

Salesman: Yeah.

Scott Pelley: That this wasn't above board?

Salesman: Right, I mean, if you're in your position, if you're buyer, and your job is to save money, and you're going to get a brand name for $40, and we offer you a $20 vial for the same drug, same size, same everything? What are you going to do? You're going to go and get two for the price of one, using us. So, they-- most of them knew that. I mean, some of them wouldn't do business with us. The ones that we didn't have as clients are the ones that knew, "Hey, you guys can't be doing this. You're not doing it right." And we'd run into that a lot. But we'd move on to the next one. There's more big fish out there.

Big fish kept a big sales team busy. But the salesman told us Barry Cadden, the president, hid that fact during state inspections.

Salesman: So, Barry would notify the managers of the sales team, "Hey, don't let the sales team either come in today, or if they're already in the building, don't let them leave." If the FDA went upstairs, or the Board of Pharmacy went up there and saw 30 sales reps making phone calls, 100 calls a day, they'd wonder what was going on, and why are you so big when you're supposed to be a mom and pop specialty pharmacy, and you're not?

That sales force sold methylprednisolone to a pain clinic in Michigan which treated George Cary's wife and Anita Baxter's mother. Lillian Cary and Karina Baxter were among the first to die. We've pulled together pictures of about half of those who died. Death often comes when the fungus reaches the brain.

George Cary: By the time the hospital determined that she had suffered a stroke it was too late.

Karina Baxter: Same here.

George Cary: She died five days later.

Lilian Cary died before doctors figured out what was happening. So, while she was in the hospital, her husband George decided to do something about a nagging pain in his back. He went to the same clinic she had. And now the fungus is in him too.

Scott Pelley: What has the treatment been like?

George Cary: You're not able to function. You're not able to concentrate. You, you, the staff called us the walking zombies.

On September 26th, after patients started dying, state officials came to inspect NECC.

Scott Pelley: What happened that day?

Joe Connolly: We were told that we're being inspected, so, "Everybody stop what you're doing, start cleaning."

Scott Pelley: So you started cleaning the clean room?

Joe Connolly: Yeah.

Scott Pelley: Now, at this point, there is a federal investigation underway.

Joe Connolly: I did-- we didn't know that.

Scott Pelley: You didn't know that, but the company knew that.

Joe Connolly: I would assume, yeah.

Scott Pelley: A prosecutor investigating this case might consider that to be obstruction of justice.

Joe Connolly: I would very much agree.

Scott Pelley: The evidence was getting cleaned up.

Joe Connolly: It seemed like it.

Despite the cleanup, the FDA tested 50 left over vials of methylprednisolone and all were contaminated. They noted the intake for NECC's ventilation was 100 feet from the recycling plant.

Barry Cadden, New England Compounding's founder was subpoenaed by Congress.

[Barry Cadden: I respectfully decline to answer on the basis of my constitutional rights and privileges, including the Fifth Amendment to the United States Constitution.]

Scott Pelley: I wonder what you would say to him today.

Patient: I'd hope it'd be through bars. Whatever I said to him I hope it'd be through bars.

After this interview, Willard Mazure lost feeling in both legs. He went back to the hospital and so did George Cary. Margaret Hamburg, commissioner of the FDA, now wants Congress to return authority over compounding pharmacies to her agency.

Margaret Hamburg: We need clear, strong, consistent federal standards that will be applied across the board, all 50 states. We need to be able to go in and inspect these facilities and get access to all of the information that we need.

Scott Pelley: What are the chances of this happening again?

Margaret Hamburg: I'm sad to say that if we do not put in place the comprehensive legislation that really defines roles and responsibilities, we will have other similar problems.

Barry Cadden and others are targets of a criminal investigation. Cadden declined to be interviewed. His lawyer told us that Cadden is saddened by all of this, but does not know how the drug was contaminated. NECC has gone into bankruptcy and we noticed in the court papers that Cadden and his partners withdrew $16 million from the company over the last year, some of it as people were beginning to die.