Federal regulators said last week that it still has concerns about sanitary conditions at Cantrell Drug Co. and asked a U.S. Bankruptcy judge to let them go forward with a lawsuit to stop the Little Rock company from selling the drugs it produces.
As of late Wednesday, U.S. Bankruptcy Court Judge Phyllis Jones hadn’t ruled after hearing three days of testimony.
Cantrell Drug, already reorganizing under bankruptcy court protection, went to court in early March to stop the U.S. Food & Drug Administration from proceeding with its suit, filed on Feb. 28, to halt Cantrell’s production and distribution of compounded drugs.
Both sides reached a settlement that called for the FDA to reinspect Cantrell’s operations over 10 days in mid-March.
At the end of the inspection, the FDA told Cantrell Drug that it “considered the goods produced during the 10-day inspection period adulterated,” according to Cantrell Drug’s court filing.
Cantrell Drug said that FDA’s observations, though, do not identify “an imminent threat to public health for any of the drugs [Cantrell] produces.”
Cantrell Drug asked Jones to stay the FDA’s lawsuit.
The U.S. Department of Justice, on behalf of the FDA, argued that the case should move forward.
“The government’s enforcement action seeks to protect the public from adulterated drug products manufactured under conditions that fall short of the minimum legal requirements necessary to ensure the safety and quality of such drugs,” it said in the filing.
“The government understands [Cantrell Drug’s] position is that it wants to preserve its cash flow and continue operations while it seeks to reorganize,” the DOJ said. “No specific provision of the [bankruptcy law], however, affords it a right to continue in business free of government regulation.”
Cantrell Drug CEO James L. McCarley Jr., had testified earlier in March that sales came to a halt after March 1, when the FDA issued a news release that said that federal regulators were seeking a preliminary injunction against Cantrell Drug.
The news release also warned that “health care professionals should immediately check their medical supplies, quarantine any drug products from Cantrell Drug Co. and not administer them to patients.”
He argued the news release shouldn’t have been issued.
Cantrell Drug has been in bankruptcy reorganization since November. In 2017, it reported revenue of $11.5 million, a steep decline from $23 million in 2016 and $18.5 million in 2015, according to its bankruptcy filing. Its loss for 2017 was $3.2 million.
Cantrell reported sales in February of $1.3 million, which was slightly lower than January’s sales, according to the company’s most recent monthly operating report on file.
Its operating income, though, fell from $213,400 in January to $37,000 in February.
Its operating report for March is expected to be filed by the end of this month.
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