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Taxpayers foot bill in $67.5 million settlement

Taxpayers foot bill in $67.5 million settlement

A class action by companies affected by the shut-down of Pan Pharmaceuticals has settled for $67.5 million.In 2003 the Therapeutic Goods Administration (TGA) recalled all the products of Pan…

A class action by companies affected by the shut-down of Pan Pharmaceuticals has settled for $67.5 million.

In 2003 the Therapeutic Goods Administration (TGA) recalled all the products of Pan Pharmaceutical after there were problems with the travel sickness tablet Travacalm, which it stocked.

A number of people who took the tablet spent time in hospital, prompting the TGA to shutdown Pan Pharmaceuticals for a six-month period.

The company stocked an assortment of other products that included numerous vitamins, nutritional supplements and herbal remedies, many of which were sold under the labels of other companies.

Pan collapsed shortly afterwards, with the Federal Government paying its founder and owner, Jim Selim, $55 million in 2008 after he sued the government for misfeasance, which included taking inappropriate action in public office.

In December 2008, 170 affected distributors, suppliers, trade creditors and retailers lodged a class action against the Commonwealth and five former and current TGA officers.

This was settled for $67.5 million last week, with the TGA avoiding potentially embarrassing and drawn-out litigation.

"It is very unusual to see a class action that is based on misfeasance in public office," said Susanna Khoury, an investment manager with IMF Australia, the litigation funder which bankrolled the action. "We had lots of expressions of interest from class members after the government wrote a cheque for Jim Selim for $55 million."

Andrew Thorpe, from MacLachlan Thorpe Partners in Sydney, acted for the plaintiffs after successfully acting for Selim previously. He was assisted by solicitor Sifa Mtango.

Corrs Chambers Westgarth partner Ian Dallen acted for the Commonwealth and Moray & Agnew provided external legal counsel for the five current and former TGA employees. Partner Andrew Toogood led the firm's team.

Egyptian born Selim died in May 2010 after a long battle with leukemia.

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