DETERMINE THE PARTIES RESPONSIBLE FOR REGULATING COMPOUNDING PHARMACIES UNDER THE CURRENT REGULATORY SCHEME, THE ACTIONS THAT EITHER THESE PARTIES OR THE FDA COULD / SHOULD HAVE TAKEN IN THIS SCENARIO, AND WHETHER PHARMACARE COULD FACE LEGAL EXPOSURE SURROUNDING ITS PRACTICES.
Determine the parties responsible for regulating compounding pharmacies under the current regulatory scheme, the actions that either these parties or the FDA could / should have taken in this scenario, and whether PharmaCARE could face legal exposure surrounding its practices.
Due Week 9 and worth 300 points
You are a new associate at the law firm of Dewey, Chetum, and Howe. John, a former researcher at PharmaCARE, comes to your office. He has concerns about PharmaCARE’s use of AD23, one of the company’s top-selling diabetes drugs. Two (2) years ago, after PharmaCARE’s research indicated that AD23 might also slow the progression of Alzheimer’s disease, John and his team of pharmacists began reformulating the drug to maximize that effect. In order to avoid the Food and Drug Administration’s (FDA) scrutiny, PharmaCARE established a wholly-owned subsidiary, CompCARE, to operate as a compounding pharmacy to sell the new formulation to individuals on a prescription basis. CompCARE established itself in a suburban office park near its parent’s headquarters. To conserve money and time, CompCARE did a quick, low-cost renovation.
CompCARE benefited from PharmaCARE’s reputation, databases, networks, and sales and marketing expertise, and within six (6) months had the medical community buzzing about AD23. Demand soared, particularly among Medicare, Medicaid, and Veterans Affairs patients. Seeing the opportunity to realize even more profit, CompCARE began advertising AD23 directly to consumers and marketing the drug directly to hospitals, clinics, and physician offices, even though compounding pharmacies are not permitted to sell drugs in bulk for general use. To circumvent this technicality, CompCARE encouraged doctors to fax lists of fictitious patient names to CompCARE. PharmaCARE sold CompCARE to WellCo, a large drugstore chain, just weeks before AD23 was publicly linked to over 200 cardiac deaths.
As CompCARE and its new parent company enjoyed record profits and PharmaCARE’s stock price approached $300 per share, reports started surfacing that people who received AD23 seemed to be suffering heart attacks at an alarming rate. The company ignored this data and continued filling large orders and paying huge bonuses to all the executives and managers, including John, whose wife recently died from a heart attack after using AD23.
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