Only once per round, however.
The Needlefang Drake Swarm's got all of 38 hit points, so 5-7 extra damage a round represents a hefty chunk of its HP.
The real trick about needlefang drake swarms is that they can actually take down PCs _before they even get to act_. Umm, it moves up to you and knocks you down and then attacks. Your turn. Oh, it attacks again... you're down/dead. Even if it misses then: Okay, you're prone and its in your square - you can't move far enough away that it won't tear you apart on its (or yours) next action without provoking.
Yes, chain hits drop level 1 characters very quickly. It'll do an average of 30 damage if it hits with every single attack, dropping almost any character who isn't Level 2, a Defender, or enjoying the Toughness feat.
If it misses any of those attacks it doesn't drop anyone. Furthermore, a Leader gets to act before the initial victim, the victim in question likely will not drop either. A gang of multiple swarms piling on one character though? That's probably not going to end well for the victim.
Controllers get to do extra damage, it's true, but if they do, then they're identifying themselves as a threat to the swarm who may well just go kill them.
If you play Needlefang Drake Swarms any smarter than their collective intellegence of 2 suggests they are going to be a huge problem. Considering they don't understand languages, let alone spell-casting, making the connection from "guy making weird noises over there" to "gout of flame appearing up to 10 squares away from that guy to hit me," seems a bit out of their league. I could see obvious projectile attacks and maybe close blast / close burst drawing attention, but not Scorching Burst, Cloud of Daggers, or a Conjuration like Flaming Sphere.
If they start meta-gaming their resistance to Melee and Ranged Attacks and forging through multiple AO's just to get adjacent to 3+ PCs are once they are a much higher-grade threat than initially detailed in the Monster Manual, IMO.
I also think intentionally concentrated fire - multiple Swarms focusing all their attacks on 1 PC to reduce enemy firepower as quickly as possible - is probably also beyond the scope of their tactics.
That said, yeah, the Needlefang Drake Swarm is a whole lot of damage potential in a level 2 monster. It is really a monster against whom the much-maligned Wizard and Dwarf Fighter can really shine.
- Marty Lund