Oct. 22, 2012 -- Chuck Leiter remembers getting an earful from his father after he helped a young Barry Cadden and his wife set up their booth at a conference for pharmacists in the late 1990s.
"My dad almost killed me," said Leiter, who works with his father at Leiter's Compounding Pharmacy in San Jose, Calif. The Caddens had an unsavory reputation. "I knew they were trouble," he said.
Cadden was the president of the New England Compounding Center, which shut down this month after it was blamed for distributing tainted steroid injections that caused deadly fungal meningitis, killing 23 people to date. Up to 14,000 patients could be at risk, and 294 cases have been reported. Another three people came down with joint infections.
Like many compounding pharmacists nationwide, Leiter wants to make it known that his family-owned business does not operate like NECC, which produced compounded drugs in such high volumes that some groups argue it was a drug manufacturer, not a compounding pharmacy, and should have been under stricter regulation. The Food and Drug Administration raided NECC's Framingham, Mass., facility on Tuesday.
Leiter's grandfather opened his family pharmacy in 1925, he said. Leiter began making compounded drugs for patients since the 1980s, starting with eye drops for patients allergic to the preservatives in most commercially available drops. He now makes 100 to 300 tailor-made prescriptions a day for everything from allergen-free thyroid medication to injectable erectile dysfunction drugs for prostate cancer survivors on whom Viagra has no effect.
It's not clear how much volume NECC was producing, but the director of the Massachusetts Bureau of Health Care Safety and Quality said that NECC was in violation of state licensing regulations. About 17,000 vials of the tainted steroid were shipped to pain clinics in 23 states.
Leiter actually doesn't produce spinal injections because of the liability, pointing out the fatal meningitis outbreak from 2001 that killed three people who received cortisone injections compounded at Doc's Pharmacy in nearby Walnut Creek, Calif. Its co-owner, Jamey Phillip Sheets, committed suicide by overdosing with painkiller patches a year later.
Unlike drug manufacturers, which are regulated by the FDA, compounding pharmacies usually fall under state pharmacy boards' jurisdiction. The FDA can step in if it has concerns about a compounding pharmacy, such as misbranding or adulteration.
FDA spokeswoman Erica Jefferson said, "FDA's legal authority to regulate compounded drugs is complex and has been challenged vigorously by the compounding industry both in courts and Congress."
Each custom drug has to be tailored to a single patient with a single prescription from a single doctor, Leiter said.
According to a 2006 FDA warning letter, NECC wasn't always doing that. Among other things, the letter said NECC was mass-producing a topical anesthetic cream, and jeopardizing another drug's sterility by repackaging it.
"Further, we have been informed that, although your firm advises physicians that a prescription for an individually identified patient is necessary to receive compounded drugs, your firm has reportedly also told physicians' offices that using a staff member's name on the prescription would suffice," the letter reads, adding the practice is not consistent with FDA policy.
The FDA did not take further action because of its limited jurisdiction over compounding companies.
"These people are all doing it for greed," Lieter said, referring to pharmacists who put their profits ahead of patient safety. "I knew the people at NECC, and I knew Frank's Pharmacy." Frank's Pharmacy is another large compounding pharmacy that had to recall drugs in May because of a fungal contamination.
NECC did not respond to requests for comment from ABC News or other news outlets. They said this in a statement: "NECC's intent has always been to operate in compliance with our licenses in the states where we do business, and we have made our best efforts to be in compliance with all governing laws and regulations during 15 years of providing hundreds of thousands of patients with vital medications. We are cooperating with agencies that have a policy of not commenting on pending investigations, and as part of that cooperation we are honoring that policy and not commenting on specific facts."
When large-scale compounding pharmacies began to crop up, health care providers became lax about writing compounded drug prescriptions for individual patients. Leiter said he received prescriptions for patients named "Mickey Mouse," and prescriptions that included extra doses that a single patient couldn't possibly need. Concerned, he called doctors' offices, but they told him their last compounding pharmacist didn't care about such things.
"If they don't want to give me that information, I don't need to fill it. I won't fill it," Leiter said.
Stephen Bernardi, who owns and runs Johnson Compounding and Wellness Center with his wife in Waltham, Mass., not far from NECC headquarters, said one of the misconceptions about his job is that he can just go in a back room and "whip up" whatever customers want.
"It's very, very specific," Bernardi said. "We keep it within the triad of the pharmacist, the specialist and the patient, and it needs to be done for a very specific reason."
He said it takes 24 to 48 hours to process a single prescription, and it goes through many steps and checks from mathematical formula to ready-for-pickup drug. Although he used to be a regular pharmacist who compounded on the side, he realized four years ago that he needed to fully commit to compounding to give himself the work environment that he needed.
Since his pharmacy is so close to NECC and most customers don't know one compounding pharmacy from another, he said he's gotten calls from concerned patients and physicians. When news outlets couldn't get inside NECC but needed stock compounding pharmacy photos, they used his shop and back room for stories about the tainted steroid injections.
"The fallout from this thing is, on one hand, it's obviously a disaster for the victims," Bernardi said. "It's putting a lot of heat on people such as myself and most of my colleagues that I know are doing it the right way. But it's also given us a chance to tell our story."
The state boards of pharmacy want to hear their stories, too. Massachusetts and California both sent pharmacists questionnaires to fill out following the meningitis outbreak.
The Massachusetts form asks for accreditation, manufacturer registration and what kinds of drugs the pharmacies compound. It also has a few yes or no questions, including whether "the Pharmacy only dispenses Compounded Sterile Preparations after receipt of a valid prescription."
Leiter called the letters a "knee-jerk" reaction to the outbreak.
"The forms don't do us squat," he said. "You can lie all the way down the line on those things."
Leiter works with several hospitals and helps with FDA clinical trials, which both require regular audits. He said he sends even more samples out for testing than he has to just to be sure his products are safe. Although California pharmacy inspections are good, he said the Pharmacy Compounding Accreditation Board does the best job.
"California does a really good job, but these people can come in and go through your pharmacy and leave. You can go back and do whatever you want," he said. "PCAB comes through and they're there for two days."
Although sending samples of his drugs for testing is expensive, Leiter said he is considering raising prices to do even more of it.
"I like to sleep at night," he said. "My kids want to do this. My oldest is 18 now, and my grandfather started doing it in 1925. I'm just not interested in taking empty risks."