Letter to the Honorable Sylvia Burwell December 1 7, 2015 Page 2

warned the Massachusetts Board of Pharmacy in 2003 that NECC posed the "potential for serious public health consequences.''4

FDA re-inspected NECC in 2004, sent a Warning Letter in 2006, and sent a letter in 2008 asserting their authority to take enforcement action. 5 Meanwhile, NECC was the subject of 52 serious adverse event reports and the Massachusetts Board of Pharmacy received numerous complaints about NECC,6 including violations of a cease and desist order to NECC from the Colorado Board of Pharmacy.7 FDA was hindered in enjoining NECC by legal uncertainties created in the federal courts, and state regulators did not revoke NECC's license until after the 2012 outbreak. In 2013, Congress passed the Drug Quality and Security Act, clarifying state and federal regulatory responsibilities.

The U.S. Department of Justice (DOJ) is pursuing NECC as a criminal matter. In December 2014, DOJ indicted 14 individuals associated with NECC. The indictment alleged that these individuals knew that they were producing unsafe medication, prompting Attorney General Eric Holder to note that the indictment' s findings "display not only a reckless disregard for health and safety regulations, but also an extreme and appalling indifference to human life."8

A Centers for Medicare and Medicaid (CMS) decision to attach Medicare liens to the NECC victim compensation fund will result in continued hardships for NECC victims and their families. We understand that the fund will be significantly reduced by mandatory payments to individuals involved in the bankruptcy proceedings, vendors, and other administrative fees and costs. Unlike other class action litigation in which defendants are positioned to contribute large

. sums to compensation funds, the amount of money NECC can contribute to the fund will leave many victims and their families uncompensated for significant suffering and losses. Should CMS continue in its current course, modest compensatory payments will be even less.

We respectfully urge you to exercise your authority9 to waive all Medicare liens in connection with the NECC victim compensation fund in light of the unique circumstances involved, the criminal prosecution of individuals associated with NECC, and the human suffering for which the federal government is partially responsible. Further, the federal government should prevent bad actors from harming victims like those affected by the NECC outbreak - not take money out of victims' pockets after a preventable tragedy.

4 STAFF OF S. COMM. ON HEALTH, EDUCATION, LABOR, AND PENSIONS, l 12TH CONG., REP. ON THE NEW ENGLAND COMPOUNDING CENTER AND THE MENINGITIS OUTBREAK OF 2012: A FAILURE TO ADDRESS RISK TO THE PUBLIC HEALTH 4 (Comm. Print 2012). 5 See id at 8. 6 See STAFF OF S. COMM. ON HEALTH, EDUCATION, LABOR, AND PENSIONS, l 13TH CONG., REP. ON THE CASE FOR CLARIFYING FDA AUTHORITY: LARGE SCALE DRUG COMPOUNDING AND THE ONGOING RISK TO PUBLIC HEAL TH 5-6 (Comm. Print 2013). 7 See Pharmacy Compounding: Implications of the 2012 Meningitis Outbreak Before the S Comm. on Health, Education, Labor and Pensions, I 12th Cong. 4 (2012) (statement of Dr. Lauren Smith, Interim Comm'r, Mass. Dep' t of Pub. Health). 8 Press Release, U.S. Department of Justice, 14 lndicted in Connection with New England Compounding Center and Nationwide Fungal Meningitis Outbreak (Dec. 17, 2014) available at http://www.justice.gov/opa/pr/14-indicted-connection-new-england-compounding-center-and­nationwide-fungal-meningitis . 9 Under the Medicare Secondary Payer Act, the Secretary of the U.S. Department of Health and Human Services has the authority to waive liens ifthe Secretary determines that the waiver is in the best interest of the program. 42 U.S.C. § 139Sy(b)(2)(B)(v).

Letter to the Honorable Sylvia Burwell December 17, 2015 Page 3

If you have any questions about our concerns, your staff may contact Gregory Proseus in Chairman Alexander's office at (202) 224-6770, Julie Babayan in Senator Warren's office at (202) 224-4543, Emily Mueller in Senator Roberts' office at (202) 224-4774, or Beth Wikler in Senator Franken's office at (202) 224-5641. We would appreciate a response by January 11, 2016.

Sincerely,

._---=----~---\~ Lamar Alexander Chairman

&~-Al Franken U.S. Senator U.S. Senator