Pan Pharmaceuticals boss acquitted in NSW Supreme Court
Last week, a jury in the NSW Supreme Court acquitted Pan Pharmaceuticals founder Jim Selim of charges that he ordered the destruction of critical computer data relating to batches of the company's travel-sickness drug, Travacalm. In May 2003, the company went into voluntary administration after the Therapeutic Goods Administration issued a recall of the supplement due to complaints, and therefore suspended Pan's licence.
As a result of this finding, the Australian Democrats have issued a press release dated 18th April 2007 on their website, demading PM John Howard issue an apology for what it regards as "a pointless exercise targeting complementary medicines" , which sent hundreds of small businesses broke. The statement goes on to say:
"1500 products were recalled, not because they caused adverse reactions, but because of speculation about inconsistent quality. Senator Allison raised concerns in the Senate at that time about what was playing out as a destructive over-reaction.
Mr.Selim was accused of a litany of charges, including breaching his manufacturing licence. In the end only two counts made it to court which were thrown out today.
The unprecedented recall had a devastating effect on small businesses and shook public confidence in complementary health, Senator Allison said. The very least those who have suffered deserve is an apology."
But during the time that Pan went into voluntary administration, Channel Nine's current affairs program "Sunday" aired a report by Helen Dalley revealing serious breaches of manufacturing practices. The program cited an analytical chemist who was employed at the company in 1990, plus a recent employee. The unidentified chemist said he witnessed "serious breaches" of manufacturing practices on Pan's part, such as ( a )powder dropping on to the floor during production process, only to be swept up and dumped back into the machines, ( b )running two different product lines in the same room, therefore risking cross-contamination of drugs, and ( c ) machines not being cleaned properly.
Likewise, the recent employee interviewed in the story added that workers were not always given sufficient time to thoroughly clean production machines.
The program revealed that Pan was found guilty in the NSW District Court on 13 counts of illegally supplying and exporting therapeutic goods, and was fined a record $280,000. The judgement was later overturned on an appeal, and a re-trial was ordered but never took place because Pan went into liquidation in 1999.
However, the report also revealed what appeared to be at least an initial lack of response from the TGA, after the unidentified chemist wrote complaints to the NSW Health Department. He said he was called in for an interview and then received a letter from the department's chief auditing officer assuring him that the complaint would be investigated. The Sunday program also interviewed TGA spokesperson Dr John McEwan who told Helen Dalley that up until the Travacalm disaster in 2003, the TGA never did surprise audits on Pan. Dr McEwan said his understanding was that there were three audits undertaken in about the two years that Pan had brought their new factory online. And that Pan was giving advance notice of all three audits.
The "Sunday" story remarked that the TGA's policy of giving Pan the benefit of the doubt is even more amazing given the company's blemished history, as well as the history of its founder Jim Selim.
Furthermore, an investigation by the Bulletin-Newsweek magazine revealed a company that failed to disclose serious irregularities to shareholders, such as Pan's prospectus published in mid-2000 saying that it was "not involved in any material litigation or administrative action". Yet the company had launched an appeal against a 1995 conviction in NSW when it was fined $280,000 for importing evening primrose oil from Thailand. At the time of the Bulletin's report, the appeal was still pending.
At the time of the TGA recall, there were allegations that the company was "hindering the TGA audit by shredding documents and wiping the hard drive of at least one computer. As well, at least one employee has said that managers set unrealistic production targets".
The entire affair appears to have highlighted a disaster that not only served to muddy the reputation of alternative health supplements in Australia, but was also condoned and allowed to continue due to lack of random unannounced audits by the TGA. Therefore, based on the above reports, it would also appear that the TGA has to own up to its role in the affair.
This perception is further reinforced by an audit of the TGA itself done in 2004, which found that the TGA had failed in its duties in the wake of the Pan Pharmaceutical collapse. The Australian National Audit Office found that the Therapeutic Goods Administration failed ito police other non-prescription medicine manufacturers' compliance with Australian standards.
In a 2005 story done on the recall of the arthritis drug Vioxx, ABC's "Four Corners" reported that the TGA denies it has similar problems to its U.S. counterpart, the FDA, as far as independence is concerned. To quote the story's transcript:
JONATHAN HOLMES: In the mid '90s, the FDA was given extra resources to speed up its drug-approval process, paid for by fees from the very industry it's supposed to police. That, says David Graham, has made it a toothless watchdog.
DAVID GRAHAM: Industry money has brought about a culture shift within the Agency that now comes to view industry as the client, as customer one. And what does it mean to have the industry as your client? It means, "I represent their interests." And that is what the FDA is now in the position of doing, representing the interests of the industry, over the interests of the American people.
JONATHAN HOLMES: The FDA maintains that it simply doesn't have sufficient power to be a tougher regulator.
DR SANDRA KWEDER: We don't have the authority to tell a company, "This is how your label has to look, this is the language that needs to go into your label, here's where it goes, end of story."
JONATHAN HOLMES: The FDA refused to take part in this program. But the man who chaired its independent expert panel on the COX-2 inhibitors eight weeks ago was more forthcoming. Indeed, Professor Alistair Wood was surprisingly frank.
Isn't it an extraordinary situation that a regulator, faced with a drug which may well be causing tens of thousands of deaths, should have to negotiate with the manufacturer for 18 months to get a label change?
PROF ALASTAIR WOOD: It is. And it's unacceptable. And it reflects the environment in the United States now, that - in which the FDA sees itself as a partner with industry. That part may be appropriate. But at some point, you have to be a regulator and understand what your regulatory imperatives and responsibilities are.
JONATHAN HOLMES: Australia'sTherapeutic Goods Administration denies it has similar problems, yet financially it’s more dependent, even, than the FDA, on pharmaceutical industry fees. Since the mid '90s it's received no taxpayer funding at all.
Is it appropriate that the office that's responsible for the public safety should basically get all its funding from the pharmaceutical companies themselves?
DR JOHN MCEWEN: As I've explained to you, that's a matter of government policy.
JONATHAN HOLMES: Are you happy with the government policy?
DR JOHN MCEWEN: I can't comment on government policy.
In light of efforts since 2003 by both Australian and NZ governments to create a joint regulatory scheme for therapeutic products, it's questionable as to how much of a solution is being developed for this lack of investigate 'teeth' which the TGA (and the FDA) appears to possess in regard to pharmaceutical companies, let alone alternative supplement manufacturers.
In their submission to the Government Administration Select Committee this year on the Therapeutic Products and Medicines Bill, the NZ Health Trust voiced opposition to the proposed Trans-Tasman regulator:
"The regulatory system proposed and the penalty regime are in fact still too light for the pharmaceutical industry given the potential for serious harm it poses and size of the companies operating in that sector and yet are enormously and unjustifiably excessive for the natural health industry. This simply highlights why the two industries cannot and should not be regulated through one agency".