|By Len Monheit
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Monday morning, North America woke up to read about the storm of controversy breaking in Australia, as the country's leading nutritional supplement manufacturer, Pan Pharmaceuticals, had its license revoked by the Therapeutic Goods Administration. This agency was in the process of having hundreds of Pan products recalled from Australian marketplace, including those made under contract for other organizations and brands.
Although Pan is involved in more than supplements manufacture, (it also makes OTC and prescription products) the number of affected products in the dietary supplements arena alone was mind-boggling, (Some sources state that Pan was involved with up to 70% of all supplement products in Australia) and the effects of this disaster have reached several countries, The impact of this issue is fuelling the already heated debate between Australia and New Zealand as they wrestle with a Trans-Tasman harmonization strategy.
The details, allegations and rumors are flying- of pending lawsuits from both clients and shareholders, of previous suspensions, of strong arming of employees to ensure silence regarding regulatory breaches, of 700% deviation in active ingredient concentration among tablets in the same bottle, of inappropriate passing and use of quarantined ingredients and even of outright ingredient substitution - for years.
- The specific list of alleged breaches include:
- Status change of over 250 ingredients from quarantine to pass without testing, and use of these ingredients without testing
- manipulation of test results of finished products
- fabrication of results on an exported product
- substitution of beef cartilage for shark cartilage over a two and a half year period.
One of the questions immediately asked of the government was that if people were getting ill as a result of Pan's manufacturing processes and products as far back as January of this year, why did the TGA wait until the end of April to take action? According to the Government, some action was taken for specific products in January, but the complete alert, suspension and recall was not issued until several audits were performed, facts determined and a case constructed for the full scope of the breaches.
Pan has blamed a rogue analyst, claiming that the issues are not as systemic as they seem and some have criticized the extent of the sweeping measures introduced by the TGA to handle the crisis and penalize Pan. With the exception of the travel product which triggered the TGA's initial inquiry, where several adverse events including hallucinations were reported, no adverse events associated with the breaches have been made public thus far.
This case has implications for Australian financial markets, for the employees (approximately 250), for Australian consumers as well as international implications for the products which are exported. The first article to come off the presses Monday morning warned Australians to avoid vitamins and supplements, and led to confusion as consumers tried to get a clear understanding of which products were affected and why. Australian manufacturers not associated with Pan were quick to point out their lack aof association with Pan and its practices, and one company, Blackmores, saw their share price rise 12% in one day. Pan client, Mayne Group Ltd, said it expected a financial impact of approximately $15-20 million from the product recall they were forced to initiate. At Pan itself, Jim Selim, the company founder and chief executive officer, resigned yesterday, and senior staff are presently being questioned.
As the market dust begins to settle, we will undoubtedly see some repositioning take place into the huge vacuum that has been created in the Australian marketplace and the other markets Pan served, such as Malaysia. From a regulatory standpoint, questions will continue to be asked of the Government and TGA, and as the recall spreads internationally, other countries are taking measures including New Zealand recalling 500 products, Malaysia, 346, and Hong Kong, 237. An updated list of the exported products affected is at: http://www.health.gov.au/tga/recalls/panos.htm.
This issue raises serious questions about GMP regulations and the cultures of organizations and industries which work in a regulated environment. It also suggests that despite well-intentioned regulations to protect consumers, despite product pre-approvals and mandatory adverse event reporting, this type of flagrant breach is still possible. It becomes obvious that there's more to the issue than having paper regulations, it comes down to dialogue between companies, the industry collective and government, and at a certain point - enforcement. According to Richard Meer, Principal Consultant, Engineering & Management Consultants (EMC), “Even the strictest CGMP regulations cannot prevent willful fraud on the consumer, ‘fraud’,because the quality and safety instances cited by the Australian TGA cannot be attributed to an "oversight" or "poor quality control" but solely to a deliberate misrepresentation to the consumer.”
In Australia, they'll be talking about stiffer penalties and more decisive action to halt manufacturing and sales activities once a breach has been identified, but perhaps they should be talking about why, when many people in the industry claim they had been aware of this situation for years, no enforcement action or even industry self-policing steps were taken to stop these quality and safety breaches.
In North America, with new regulations pending in both the US and Canada, there are hard lessons to be learned as we turn from the ‘frying Pan’:
- The industry's need to turf outliers and companies with the wrong type of approach and culture
- Without enforcement, any regulations are just a sheet of paper
- How to protect consumers and provide access to the appropriate information as efficiently as possible, whether it involves recalls, product safety issues, or conclusive scientific evidence
- How to deal with endemic industry and company breaches
Related links: TGA Release on NPIcenter:
TGA Site: http://www.tga.health.gov.au