Dr James McCarley, Jr., Chairman and CEO of US-based Cantrell Drug Company, a 503B registered outsourcing facility, has announced that his Company has filed for reorganisation under Chapter 11 of the US Bankruptcy Code.
Commenting n the news, Dr McCarley said: “Above all I want to make it clear to everyone that our intent is to pay one hundred cents on the dollar to all our creditors. We have no intention of any sort of liquidation, cram down or write off. I’ve asked our vendors to work with us, to give us time to get back on our feet. So far, I’ve been very pleased with the understanding and support we’ve received from the trade.”
Cantrell Drug Company, located in Little Rock, Arkansas and founded in 1952, provides sterile injectable pharmaceuticals that are primarily used in hospitals. These are drugs that are either in short supply or those that require compounding in order to prepare the medication in a final form for administering to patients. Cantrell’s products offer significant cost savings to hospitals who are under tight budget constraints.
“To our hospital customers, I understand that you rely on Cantrell Drug and that drug recalls and production shutdowns create headaches in your supply chain,” said Dr McCarley. “It’s my intent to restore the goodwill and trust we’ve worked so hard over the years to gain. Our goal is to come out of Chapter 11 in a minimal amount of time and to pursue our expansion plans that have been in the works for the past year. We will emerge from all this as a stronger, better Company.”
FDA inspections behind financial stress
Dr McCarley noted that the current financial stress is due to two FDA inspections in the past year that resulted in temporary suspension of product manufacturing and shipping.
“Our deficiencies were regulatory in nature and not in response to any product problem or patient illness. Out of an abundance of caution, we ceased production two times in the past eight months. We’re a privately-owned, family business, and we just don’t have the resources of a big publicly traded pharmaceutical company to weather the economic consequences of a shutdown; hence, the reorganisation of our company. I’m paying for operations and payroll out of my own pocket at this point. My wife, Lynn, who co-owns the company with me, and our family is determined to get through all this.”
As an example of other drug company shut downs, Dr McCarley referenced Pfizer subsidiary Hospira which issued a nationwide recall, in May of its vials used to inject sodium bicarbonate, citing sterility concerns from the FDA. The recall exacerbated the shortage of the potentially lifesaving drug.
“I’m not here to blame the FDA or anyone else for that matter,” said Dr McCarley. “I’m the CEO, and I take full responsibility for our Quality Assurance (QA) and Quality Control (QC). We’ve been working diligently with the FDA to address their concerns. I know the shutdowns and interruption of product shipments adversely affect our hospital customers. With this in mind, I’ve made the decision to outsource the authority for batch release and other aspects of our QA/QC department to Escalate Sciences, an FDA/cGMP third party expert firm. Escalate will have complete autonomy to release lots and run our quality unit to avoid any appearance of a conflict.”
Dr Edgar Torres, Ph.D, Founder & President of Escalate commented: “Cantrell Drug has proactively contracted us to provide quality oversight and support their Quality Systems Remediation Program. We look forward to working and collaborating with Cantrell Drug Management in the Quality Systems Remediation efforts and on the continuous improvement of their Quality Culture.”
Cantrell Drug Company’s current 20,000ft2 GMP facility includes production (laboratories and cleanrooms), quality assurance, warehouse, and office space. After exiting reorganisation, Cantrell will continue efforts to raise capital for its planned expansion into a second production facility for the capability to handle higher volumes and to add redundancy for emergency preparedness.
The planned expansion facility is approximately 42,800 ft2 with an addition of approximately 10,000ft2. The 52,800 ft2t facility will include a planned 20,000 ft2 cleanroom.
Cantrell employed over 175 workers prior to recent layoffs and planned to add another 150 to its payrolls for the expansion.
