More negligence uncovered in pharmaceutical industry

by Bob Briton

New scandals are rocking the pharmaceuticals industry in Australia. With 
the future of suspended complementary medicines manufacturer Pan 
Pharmaceuticals still hanging in the balance, reports of other serious 
violations of manufacturing standards keep rolling in.

Last week the Therapeutic Goods Authority (TGA) moved to shut down 
Australian Pharmaceutical Industries (API), the nation's second biggest 
drug company and parent company of Soul Pattinson Manufacturing and the 
Soul Pattinson and Chemworld pharmacy chains.

This was followed up with the announcement that Cottee Health PharmAction, 
producers of more than 450 prescription drugs and over-the-counter 
pharmaceuticals, had gone into voluntary administration. Inability to raise 
the capital necessary to ensure quality control was said to be behind this 
major company's difficulties.

Elsewhere, the TGA was holding talks with Brisbane-based drug manufacturer 
New Products Development about the need to rectify resources, training and 
systems after a recent audit by the regulator. TGA spokeswoman Kay McNiece 
told the media ". it is fairly common to have lots of things that need to 
be fixed up. Invariably there are things that need to be rectified."

Ms McNiece said a mouthful! The audits that led to the closing down of API 
discovered an open drain of liquid effluent, cockroaches, rotting wooden 
floors and unacceptable levels of bacteria on equipment at the Kingsgrove 
factory, which was described as "very run down". Paint flaking off the 
ceiling, holes and crevices in walls and floors, chipped and flaking paint 
on machinery and seriously damaged walls were also among the potential 
hazards.

However, as API managing director David Young points out, the decision to 
close the factory before the TGA did it for him was taken because of an 
inability to overcome problems with the identification, documentation and 
validation of products containing promethazine hydrochloride. Errors in the 
use-by date of this ingredient mean that the products, while considered 
safe for consumption, will lose their medicinal potency before their expiry 
date. Seven cough and allergy medicines have been recalled as a result. 
[See box for names of recalled medicines]

Mr Young sought to excuse the failings of his company, saying that for the 
past two years the management had been preoccupied with finding new 
premises for the manufacturer's operations. He is confident that the 
company will bounce back in spite of reports that Fred Bart, the 
entrepreneur behind an attempt to buy out the failed Pan Pharmaceuticals 
concern, has shown interest in API's predicament.

In the case of Cottee Health PharmAction, a scramble to meet the demand 
left by the collapse of Pan Pharmaceuticals had supposedly caused the drug 
maker to run ahead of its quality control procedures. The inability to 
raise the $2 million required for an upgrade and the loss of a contract 
accounting for 40 per cent of Cottee's business were cited as the reasons 
for the company's woes.

However, The Australian Financial Review reported last week that 
Cottee Health PharmAction staff had been told by the TGA that they had 
concerns about their employer's air-conditioning and their ability to meet 
certain rules for "good manufacturing practice". Penalties for such 
violations have been stiffened considerably in the wake of the Pan 
disaster.

Penalties for malpractice now include fines of up to $1.1 million and five 
years jail. Should investigations into API uncover sufficient evidence, the 
company faces a $550,000 fine while individuals found in breach could incur 
a $110,000 fine and/or 12 months imprisonment. The Federal Government is 
said to be considering on-the-spot fines for breaches and a system of 
releasing information to the public about the safety and efficacy of 
medicines.

Some commentators, including Martyn Goddard of the Australian Consumers 
Association are encouraged by these developments.

Commenting on the "voluntary" suspension of API's manufacturing licence, he 
is reported as saying: "The TGA's reaction in this case shows that it has 
really listened to the criticism it copped after Pan and it has done 
something about it. We call on the parliamentary [health] secretary Trish 
Worth to continue to strongly support this new but controversial toughness 
from the TGA."

Mr Goddard's comments raise a lot of questions. What was the TGA doing 
prior to the Pan scandal while all these cases of negligence were banking 
up? TGA technical director John McEwen was quoted last week defending the 
agency's track record. "There was a criticism that people knew that we were 
coming and could cover things up and put certain things away. That is a 
lesson learnt — that unannounced audits are appropriate ON OCCASION." 

It is hard to imagine that the many problems at the API factory that were 
described in great detail in the media last week could simply be swept 
under the carpet. That factory was supposedly audited in December last year 
and before that in August 2001. The TGA claims that it audits 250 of the 
335 medicine-producing plants in the country each year. If that is so, to 
what should we attribute the sudden rise in the number of violations of 
acceptable standards that we have witnessed in recent months?

Clearly, the TGA has a lot of explaining to do. It is unlikely, however, 
that the explanation would effectively counter the logic of the case for 
putting the pharmaceuticals industry under public ownership and control. 
API managing director David Young was speaking recently about the mood at a 
meeting of his company's shareholders in Sydney following the developments 
of last week:

"I think they should be disappointed, we're disappointed, I wouldn't expect 
shareholders not to be. Our job's to look after the shareholders' interests 
and we believe as a board we've made the best decision to ensure that we do 
that for the long term."

It's way past time that the interests of the public for safe and effective 
medicines were made the top priority of the pharmaceuticals industry and 
not the need to boost profits and returns to shareholders.