Jury Rules on Charges against Owner and Head Pharmacist of NECC

On March 22, 2017, the jury rendered its verdict in the case of the United States v. Cadden, in the U.S. District Court for the District of Massachusetts (jury verdict form available here).

The defendant, Barry J. Cadden, was the part owner and head pharmacist at the New England Compounding Center (“NECC”), the compounding pharmacy that shipped contaminated compounded epidural methylprednisolone (MPA) nationwide, which allegedly resulted in widespread sickness and death in 2012 (court documents show Mr. Cadden did not dispute these allegations).  Mr. Cadden is the first of 14 former officers and employees of NECC to be tried (a number of charges have been dismissed or terminated for other defendants – see previous posts here and here). The various charges brought against the individuals associated with NECC include second degree murder in seven states as well as racketeering, mail fraud, conspiracy, contempt, structuring, and three types of violations of the Federal Food, Drug, and Cosmetic Act (“FD&C Act”).  It is expected that Glenn A. Chin, NECC’s supervisory pharmacist, will be tried next, but his trial date is not yet known.

This post provides a breakdown of each of the charges brought against Mr. Cadden, as described in the instructions to the jury, and the corresponding jury findings (jury instructions available here).

Except for Counts 2 and 3, which charge conspiracy, each of the other counts could be proven, according to the jury instructions by: (a) convincing the jury that Mr. Cadden personally committed or participated in the offense; or (b) showing that he aided and abetted someone else in committing the offense (i.e., intentionally helping someone else commit a crime).

Count 1: Second Degree Murder & Other Racketeering Charges

Count 1 charged Mr. Cadden with a violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). As the (required) predicate acts of RICO, the government alleged that Mr. Cadden committed 77 acts of racketeering in violation of state or federal law, including 25 acts of state second degree murder (in seven states) and 52 acts of federal mail fraud.  To be found guilty, the jury needed to agree unanimously that Mr. Cadden committed at least two of the same types of racketeering acts.

Second Degree Murder

For a finding of second degree murder, as it applied to this case, the jury would have had to find, beyond a reasonable doubt (according to the jury instructions):

• That an unnatural death occurred within the territorial jurisdiction of the affected state;
• That the victim died as a result of an act or acts taken by Mr. Cadden; and
• That Mr. Cadden acted with a culpable state of mind (this is a state-specific requirement, generally not requiring proof Mr. Cadden had specific intent to kill, but rather the government must prove he acted with extreme indifference to human life).

The first element, as well as that contaminated drugs distributed by NECC caused each of the victims’ death, was uncontested.  However, Mr. Cadden contested that the deaths were caused by his actions, and were the natural and probable consequence of an act that Mr. Cadden knew was highly likely to cause death.  In furtherance of the charges, the government alleged that:

• On May 21, 2012, June 29, 2012, and August 10, 2012, three lots of preservative-free MPA compounded by NECC were improperly sterilized because Mr. Chin, with Mr. Cadden’s knowledge, kept the drugs in the autoclave for less than the prescribed 20 minutes, and did not verify the autoclave sterilization process through use of a biological indicator as required by USP<797>.
• Mr. Chin, acting at Mr. Cadden’s direction, selected too few samples from these lots of MPA for sterility testing, and that Mr. Chin, with Mr. Cadden’s knowledge, did not conduct sterility testing of the filled vials shipped to NECC customers for patient use because he drew the samples to be tested from preservative-free MPA stock before filling the individual vials.
• Mr. Chin, with the knowledge of Mr. Cadden, directed NECC technicians to label vials of the drugs as “injectable” drug products during a time period when NECC had recorded action-level environmental sample results in Clean Room 1 and had not taken remedial action as required by USP<797>.

The jury found Mr. Cadden not guilty on all 25 charges of second degree murder in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee, and Virginia.

Mail Fraud

The crime of mail fraud (18 U.S.C. § 1341) prohibits the use of mail or an interstate carrier, public or private, in furtherance of any scheme or artifice to defraud, or to obtain money or property by means of false or fraudulent pretenses, representations, or promises. The 52 alleged Racketeering Acts of mail fraud were broken up into four separate groups:

• Shipments of MPA (alleged shipment of drugs compounded in a manner that did not meet USP standards as described in the allegations, above).
• Shipments of Untested Lots (alleged shipment of lots identified as sterile prior to receiving test results confirming sterility and quality, and failing to recall lots when it learned of out of specification results).
• Shipments of Expired Drugs (alleged shipment of drugs knowingly compounded with an ingredient that had expired, in violation of USP, and alleged disguised use of the expired ingredients).
• Unlicensed Pharmacy Technician (alleged knowing representation to customers that NECC complied with Massachusetts pharmacy regulations and USP guidelines even though a pharmacy technician, who had voluntarily surrendered his license, worked as a pharmacy technician in Clean Room 2 filling cardioplegia orders for hospital customers).

The jury found Mr. Cadden guilty of 27 counts of Shipments of MPA, 10 counts of Shipments of Untested Lots, and 10 counts of Unlicensed Pharmacy Technician; however, the jury found him not guilty of the 5 counts of Shipments of Expired Drugs. Having found him guilty of certain predicate acts, the jury also found Mr. Cadden guilty of the offense of Racketeering as charged in Count 1,.

Count 2: Racketeering Conspiracy

Count 2 alleged that Mr. Cadden “conspired” (i.e., entered into an agreement with others), to violate the RICO statute (note: under federal and state law, a conspiracy is a separate and distinct crime from the underlying offenses). A conspiracy is an agreement between or among two or more persons to accomplish an unlawful purpose (i.e., one forbidden by law) as the jury instructions explained.  The government alleged that Mr. Cadden knowingly and willfully entered into an agreement with Mr. Chin and other employees of the NECC and its marketing arm Medical Sales Management (MSM) to violate the RICO statute through a pattern of racketeering activity by committing at least two specific predicate acts of mail fraud within a ten-year period.

The jury found Mr. Cadden guilty of Racketeering Conspiracy.

Count 3: Conspiracy to Defraud the United States

Count 3 charged Mr. Cadden with conspiring with others to defraud the United States by impeding the ability of the FDA to carry out its regulatory mission. The government alleged that Mr. Cadden conspired with certain employees of the NECC to make false or misleading statements, or materially misleading omissions despite a duty to disclose the information, with the intent of deceiving FDA about the true nature of NECC’s business in order to deflect the FDA from carrying out the regulatory oversight it would have otherwise exercised over NECC.

The jury found Mr. Cadden not guilty of Conspiracy to Defraud the United States.

Counts 4-56: Mail Fraud

Counts 4-39 and 41-56 charged the 52 RICO predicate acts of mail fraud as separate substantive crimes under the federal mail fraud statute. The government alleged that Mr. Cadden devised a scheme to defraud NECC’s customers and the patients of those customers, and to obtain money and property by means of materially false and fraudulent representations regarding the quality and production of NECC’s drugs.  It further alleged a litany of specific failures and actions on the part of Mr. Cadden and other NECC employees, as well as that Mr. Cadden marketed NECC as being in compliance with all pharmacy regulations, and that its compounds were safe for human use.

The jury found Mr. Cadden guilty of all 52 counts of Mail Fraud.

Counts 57-109: Introduction of Adulterated Drugs into Interstate Commerce with Intent to Defraud and Mislead

Insanitary Conditions

Counts 57-90 charged Mr. Cadden with violations of the FD&C Act for allegedly introducing drugs into interstate commerce that had been prepared under insanitary conditions. The instructions to the jury stated that the government, in order to secure a felony conviction on these counts, needed to prove, beyond a reasonable doubt, that Mr. Cadden:

• Introduced drugs, or delivered them for introduction, into interstate commerce, or caused them to be introduced into interstate commerce,
• Knew that the drugs were adulterated, in that they were prepared, packed, or held them under insanitary conditions (i.e., conditions in which drugs may be contaminated with filth); and
• Placed the drugs in interstate commerce with the intent to defraud or mislead (e.g., took actions to conceal or prevent the discovery of truth).

The government did not need to prove any actual contamination of the drugs to establish adulteration, but only that there was a reasonable expectation that the drugs could become contaminated, according to jury instructions.

The jury found Mr. Cadden not guilty of these 34 counts of Introduction of Adulterated Drugs into Interstate Commerce with Intent to Defraud and Mislead.

False and Misleading Labeling

Counts 91-94 charged Mr. Cadden with introducing drugs into interstate commerce bearing false or misleading labels. According to the jury instructions, the government needed to prove, beyond a reasonable doubt, that:

• Mr. Cadden introduced drugs, or delivered them for introduction, or caused them to be introduced into interstate commerce;
• The drugs were misbranded, in that the labeling for the drugs was false or misleading (by misrepresentation or omission); and
• Mr. Cadden acted with the intent to defraud or mislead.

The jury found Mr. Cadden not guilty of these four counts of Introduction of Adulterated Drugs into Interstate Commerce with Intent to Defraud and Mislead.

No Prescriptions

Counts 95 and 99-100 charged Mr. Cadden with dispensing drugs into interstate commerce without valid prescriptions.   The government needed to prove, beyond a reasonable doubt, that:

• Mr. Cadden introduced drugs, or delivered them for introduction, or caused them to be deferred into interstate commerce;
• That a valid prescription for the drugs was required;
• The drugs were dispensed without such a valid prescription issued by a practitioner licensed by law to administer such a drug; and
• Mr. Cadden dispensed the drugs with the intent to defraud or mislead.

The jury found Mr. Cadden guilty of these three counts of Introduction of Adulterated Drugs into Interstate Commerce with Intent to Defraud and Mislead.

We put together a table of the various charges, which you can access here.