The pharmacy focused on small pain and eye clinics, but as a growing number of drugs became backlogged, hospitals signed on as customers and its sales exploded.
One former manager of its sister marketing company said that by 2008, New England Compounding was “wildly profitable,’’ earning $13 million in revenue, of which more than $5 million was pretax income. The manager wanted to remain anonymous because he is worried about being sued.
The company grew from about 20 employees in 2009 to 50 by the time it shut down two months ago.
“It was crazy, crazy expansion,” said one former sales representative who did not want to be identified because he signed a confidentiality agreement.
Another salesman, the one who did not want to be identified because he was afraid it would hurt his career, said Cadden wanted his pharmacy to grow, particularly after watching Ameridose become much larger. “He had sort of a love-hate relationship with Ameridose.”
But New England Compounding benefited from its ties to Ameridose, which frequently referred customers to its sister company for products it couldn’t supply itself.
FDA records for this year show that more than three dozen hospitals purchased drugs in shipments of 500 doses or more — even though Massachusetts law prohibited New England Compounding from selling drugs without patient-specific prescriptions because it was not licensed as a manufacturer.
Gaston Memorial Hospital in North Carolina purchased 900 vials of nalbuphine, a powerful painkiller, in July alone. The hospital acknowledged it did not have individual prescriptions for each dose.
Hospital spokeswoman Dallas Wilborn said the hospital was forced to buy from the company “due to a shortage of medications from our traditional suppliers.”
The salesman who signed the confidentiality agreement said hospitals were desperate for medications in short supply. “They were freaking out,” he said. “If they couldn’t get these drugs, patients were going to die.”