Legal therapy gets Pan founder Jim Selim $55m

Source: The Australian

Susannah Moran

15th August 2008

In the weeks after a faulty batch of travel sickness medication sent people across the country into bizarre and dangerous hallucinations, a group of senior officers from the country's drug regulator met to discuss the crisis.

With 19 people in hospital suffering symptoms including heart palpitations, nausea and psychotic episodes, the officers of the Therapeutic Goods Administration knew they needed to act.

They had identified a culprit: the anti-nausea drug responsible for the wave of illness was Travacalm. And perhaps serendipitously for the TGA - at least at the time - it was made by a company the commonwealth body had a long history with - Pan Pharmaceuticals.

Records of the March 2003 meeting showed the group had steely determination to shut down Pan, founded by Egyptian-born Jim Selim in 1974.

In the 1990s, the TGA had pursued the company, all the way to the High Court, without success. This time, there would be no mercy. "Go for the jugular," one officer said at the meeting.

It was the first indication the TGA was prepared to bend the rules to get Mr Selim. Within a month, the TGA had ordered a recall of all of Pan's 1600 products and cancelled its licence.

The company, worth more than $300 million on the Australian Stock Exchange, collapsed, sending shockwaves through the complementary medicine industry, costing investors and creditors millions, and sullying the reputation of its founder, Mr Selim. But he fought back, suing the TGA for $234 million in the Federal Court, citing a vendetta against him.

Yesterday, five years after he was ruined by the TGA, he had an astonishing win.

The case settled publicly in his favour, with the Government agreeing to pay him $55 million - the figure he had asked for in settlement negotiations.

The Federal Court was told yesterday that the Government had agreed to a judgment being entered in favour of Mr Selim, who claimed the TGA had breached its duty of care and engaged in misfeasance in public office, or abused its powers.

The $55million payment may be the tip of the iceberg, with the Government potentially facing a slew of litigation from employees who lost their jobs, shareholders and other businesses affected by Pan's closure, from pharmacies to fellow drug manufacturers.

Read the full story.

Related stories:

Payout not the end of the Pan saga

A whopping capitulation

Drug watchdog takes $50m court hit

ANH Comment

This is huge victory for the natural health sector against the Australian Therapeutic Goods Administration (TGA), recognised as one of the most restrictive regulators in the world and a very public humiliation to boot. 

Having heard from the testimony of high level officials in the TGA about the levels they stooped to and the dirty tactics they employed to destroy Pan Pharmaceuticals, it really leaves a bad taste in one's mouth.  It also raises once again the question: is this really all in the name of protecting consumer safety?  Given that the settlement did not include a confidentiality clause, I'm sure we'll be hearing more about their distasteful methods in due course.

The sad human tragedy that can't be ignored whilst everyone is celebrating, is that the enormous stress caused by five years of intense legal battles has taken its toll on Jim Selim's health and he's been battling leukaemia.  Unfortunately he's not done in the courts yet as he's also having to defend himself against criminal charges brought against him by the TGA, but hopefully this judgement will go a long way to seeing the case dropped, as other cases have been, due to insufficient evidence.

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