Bankrupt PRACS’s Payments to Uncompensated Trial Subjects ‘Up to Trustee’

By Zachary Brennan

- Last updated on GMT

PRACS Bankrupt, Trial Subject Payments ‘Up to Trustee’
The PRACS Institute has filed for bankruptcy after closing down its US and Canadian research sites, but the question of whether unpaid trial participants will receive payment for their work is still up in the air.

The company failed to reveal any information to its employees or study participants leading up to the closures and bankruptcy, according to outraged participants and former employees sounding off on the company’s Facebook page.

Michael Gries -- chief restructuring officer for PRACS, who has worked with the company for six weeks – told Outsourcing-Pharma.com that none of the study participants have been paid for ongoing or recently completed trials but that their payments are “not up to me at this point in time. It’s in the hands of the trustee​.”

The institute’s trustee is Jose Rodriguez of San Antonio, who resides where the Chapter 7 bankruptcy​ was filed. Rodriguez is represented by Ronald Hornberger of the law firm Plunkett & Gibson in San Antonio. Hornberger did not respond to a request for comment as of press time.

Gries said Rodriguez will be communicating with the study sponsors about the payments for trial participants. He noted that the reason participants weren’t paid for their work is because normally the institute pays participants before it receives the funding from the sponsors for the trials, but the company did not receive that money after investors pulled their funding.

PRACS had between 20 and 30 studies ongoing in the U.S., and an additional 10 in Canada. According to the Chapter 7 filing, PRACS has between $10m and $50m in assets and owes between $100m and $500m to between 100 and 199 creditors. Drugmakers Novartis, GlaxoSmithKline, Apotex, Cipla, and Impax are all listed as creditors.

People need to be patient​,” Gries said, noting that it “remains to be seen whether the payments will come from the sponsors or some other source through a sale of assets​.”

The company’s sites in Fargo, North Dakota, St. Louis, Miami and others in Toronto and Ontario were shut down. Gries also said that at the time of the closing last week, none of the laid off employees received severance packages but all were paid through their last day of work via wire transfers on Thursday.

The company is completely shut down so if new investors are interested, they can contact the trustee and acquire one location or more and seek to reopen it​,” Gries added.

Possible Looting of Sites

Reports on the company’s Facebook page noted that some of the closed facilities were being looted by former employees but Gries said he has not heard of looting and that “all of the sites were locked down and secure​.”

It’s a little chaotic right now, but it’s all up to the trustee​,” Gries said, adding that the trustee will propose some kind of plan and present it to the judge presiding over the case.

The bankruptcy comes after the beleaguered company, formerly known as Cetero, faked documents and manipulated lab samples​ in 2010, according to the US FDA.

Gift Certificates

The Fargo branch of PRACS revealed on its Facebook page that uncompensated trial participants could receive gift certificates worth up to $100 from local establishments.

We would like to let people know that we will donating up to $100 in Gift Certificates at Maxwell’s Restaurant located in West Fargo and Artisan Home Furnishing of Fargo to any PRACS study participant who was not compensated for their time​,” PRACS said.

But some of the trial participants remain irate. Marsha Sims, a former PRACS employee from O’Fallon, Missouri, wrote on Facebook, “I went to a study for 27 days and the day I went to pick up my check is the day they closed. I was an employee at PRACS and we never saw it coming. I lost my job plus [$]1500 for the study I completed​.”

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