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Nazis, lies and spying private detectives: how thalidomide’s maker avoided justice

Michael Magazanik (left) with lead plaintiff Lynette Rowe, her mother and lawyer Peter Gordon during the trial in Melbourne. AAP/Genevieve Gannon

Nazis, lies and spying private detectives: how thalidomide’s maker avoided justice

THALIDOMIDE SERIES: In December 2013, a class action by Australian and New Zealand victims of the drug thalidomide reached an A$89 million settlement with Diageo, the company that now owns Distillers, which distributed the drug in the region.

Michael Magazanik was one of the lawyers involved in the case and wrote the book Silent Shock based on that work. As part of our series on thalidomide, he spoke to Ian Freckelton about his research for the case and his book.


Ian Freckelton: What inspired you to write your book, Silent Shock?

Michael Magazanik: The book grew out of my involvement as a lawyer in the litigation for survivors of the notorious drug, thalidomide. We won a multi-million-dollar settlement for our lead plaintiff, Lyn Rowe, and then an A$89 million settlement for the class suit that followed.

After all that was done, I turned my attention to writing about what really is the untold history of thalidomide and the appalling behaviour of the companies concerned. But also the heroism of the survivors and their families, and some of the remarkable characters – many of them doctors – who were involved along the way.

Ian Freckelton: Why did you call it Silent Shock?

Michael Magazanik: Grünenthal, the German company that developed the drug and marketed it in the 1950s and early 1960s, didn’t apologise for thalidomide until 2012. Then Grünenthal’s chief executive came out and said the reason it’s taken us so long to apologise is what we did to you sent us into silent shock.

It only served to enrage thalidomiders around the world, who felt that they were the ones entitled to silent shock, not the company. So that was one basis for the book’s title.

Ian Freckelton: You’ve referred to Grünenthal, and there’s also the company Distillers involved in the case. What’s the relationship between those two?

Michael Magazanik: Grünenthal was the German company that developed the drug. It was born after World War II, during the hunt for synthetic drugs around the world. They knew it was new, they didn’t know anything else about it. They tested it on animals and they say they found it acted as an effective sedative and hypnotic.

Grünenthal entered into contracts with other companies in other parts of the world. For our purposes, the main one was Distillers, which was the leading whisky company in the world that had developed a pharmaceuticals offshoot.

So 50 years on, when we looked for defendants, the obvious ones were Grünenthal, the developer of the drug, and Distillers, because they distributed the drug in Australia.

Ian Freckelton: There was a culture around this period of the late 1950s and early 1960s in relation to treating women for anxiety conditions and similar, wasn’t there?

Michael Magazanik: There was and there was a general culture of respect for authority at the time too. Women accepted what their doctors told them and just took the pill. There wasn’t any consultation with your patient about what you were giving them, or the wisdom of it. Or whether this was a new drug or whether it was effective or what it was for.

Ian Freckelton: In terms of people’s mistrust of big pharmaceuticals, has thalidomide had a big role to play?

Michael Magazanik: Well, thalidomide really has. In the wake of the disaster, the pharmaceutical companies, especially Grünenthal and Distillers, really wanted to perpetuate the myth that not much had been known about the risks of medicating pregnant women.

Why ‘Silent Shock’?

What they wanted people to believe was that nobody really knew there was a risk. That was the line that was disseminated: by the standards of the time, those pharmaceutical companies could have done nothing to avoid the disaster.

We knew this was going to act as a barrier to successfully litigating. So we had to dig down into the medical journal articles that were around at the time, talk to early doctors about what they knew, and look at teaching materials from universities to find out what was known. And it was really clear that what was known at the time was pretty sophisticated.

Ian Freckelton: What did the manufacturers know about the risks of the drug?

Michael Magazanik: When thalidomide entered the marketplace, the first side effect that the drug companies became aware of was nerve damage, or peripheral neuritis. Sometimes, it was a really agonising torment; people ended up in psychiatric institutions as a result of thalidomide-related peripheral neuritis.

Grünenthal ended up buried under an avalanche of these reports. So I went to an archive in Germany with translators and we looked at this material, and it was unbelievable. The company’s response to the reports of nerve damage had to be seen to be believed.

They denied them, they minimised them, they pressured editors of medical journals not to publish critical articles, they hired private detectives to spy on doctors, they got people to pose as patients and go into doctors’ offices. It felt like reading a Hollywood script.

Grünenthal was promoting the drug as absolutely super safe and were telling doctors and anyone who asked that it was safe to use in pregnancy, yet at the same time they knew that it was causing a massive amount of nerve damage. They knew they’d not tested the drug on a single pregnant animal and they knew they’d never followed up on a single pregnant woman who’d taken the drug to check the results. To us it was a clear picture of outrageous culpability.

Ian Freckelton: What do you think enabled the senior executives to maintain that zeal to make profit in spite of the fact that they were on notice that it could be having incredibly detrimental effects on consumers?

Michael Magazanik: I have wrestled with that. It’s not a question for lawyers or doctors. It’s imponderable, kind of unknowable.

Ian Freckelton: And what about the fundamental breach of ethics by these companies? There are all sorts of assertions that other pharmaceutical companies have behaved similarly.

Michael Magazanik: Grunenthal emerged in the mid-to-late 1940s. The man in charge of thalidomide at Grünenthal had been a Nazi doctor in the German army, had done experiments in occupied Poland during the war, had been charged, made it to Germany, and was employed at Grünenthal.

If you take a doctor with a dubious wartime history, a forceful personality, put him in charge of a pharmaceutical lab and incentivise him to sell more and more of the drug, then I think that’s part of the way to understand why Grünenthal behaved the way it did.

How thalidomide became the ‘morning sickness drug’

And then in the 1970s - this is what I still find hard to believe - Grünenthal was so brazen that they appointed as the chairman of their board a man who had been convicted and jailed for mass murder at Auschwitz – Otto Ambros.

Now, there were lots of Nazis at the end of World War II, of course, and those people had to find jobs - but there weren’t many convicted mass murderers.

For Grünenthal to provide a home to a convicted mass murderer in the 1970s is astonishing. And for me, it’s the prism through which to view the Grünenthal of the period. The Grünenthal of the period when thalidomide was on the market behaved in ways you would hope aren’t quite replicated today. It would astonish me, to be honest, if they were.

Ian Freckelton: Grünenthal were prosecuted in Germany. When did that take place and tell us about the outcome?

Michael Magazanik: Thalidomide was pulled from the market at the end of 1961. It had gone on sale in Germany in 1957 and it really wasn’t until early 1961 that this surge in malformations was even identified. And there was trouble.

There were thousands of malformed infants in Germany and around the world. There were many thousands of people with nerve damage as a result of the drug. Their licensees were furious with them. The police were raiding their headquarters looking for documents.

But it wasn’t until 1968 that the trial started. It was the biggest trial in Germany since the war crimes trials and Grünenthal employed the most expensive and efficient lawyers around. The prosecution was severely over-matched.

The first thing the prosecution tried to do was establish that thalidomide caused malformations – a bit like cigarettes cause cancer. By that stage, the drug had been withdrawn all over the world and thalidomide’s teratogenicity (tendency to cause congential malformations) was just a fact. Yet Grünenthal found people to come along to court and say that there was no proof, you couldn’t show the nexus, the biological mechanism was unknown, and they fought and fought and fought.

In the end, there was a settlement. The heat went out of the criminal prosecution and out of all of that Grünenthal also got immunity from suit in Germany for ever after. For Grünenthal, it was really a legal triumph. Through a very determined and ruthless and efficient legal effort, they managed to escape.

In our litigation, I always felt it had entered Grünenthal’s DNA that they were just not legally responsible for the deformities, malformations and deaths as a result of thalidomide because they felt they had faced a trial in Germany and there had been no conviction. And their belief in this idea that they were innocent victims of thalidomide is profound.

Ian Freckelton: Let’s come to Australia then. Was there any litigation before the litigation brought by Slater and Gordon?

Michael Magazanik: There was some litigation in the 1970s for survivors of the drug. It was not a full-scale litigation. At the time, there were 36 known Australian victims of the drug and so Distillers settled with 36 or 37 Australians.

The known risks of medicating pregnant women.

They were pretty paltry settlements. People with terribly profound injuries got one-off payments that were never going to be enough to provide them with care.

By the time that I became involved, most of those survivors had long run out of money and were reliant on their own endeavours. Some of them had established successful careers, others were reliant on welfare. But it was clear that what had been done for them in the 1970s was nowhere near enough.

Ian Freckelton: There’s a real spectrum of thalidomide effects, isn’t there? It’s not just people with no arms and legs.

Michael Magazanik: That’s right. No arms and legs is probably relatively unusual. There’s this idea that took hold in the 1970s that they had to be perfectly bilateral, so you couldn’t have a full arm on one side and half an arm on the other side because any injuries as a result of thalidomide had to be bilateral.

There were all these very strict, exclusionary criteria, which had the effect of excluding some people who were clearly thalidomiders.

And the Rowe family, for example, just never came forward. Wendy Rowe was given Distaval early in pregnancy by her doctor and Lyn was born without arms and legs. She clearly had a thalidomide injury, but when Wendy talked to the doctor in the aftermath of Lyn’s birth some months later, the doctor said no, this couldn’t have been thalidomide, it was a virus you had during pregnancy.

Ian Freckelton: So she wasn’t one of the 36 or 37?

Michael Magazanik: She was not. She was entirely uncompensated. Our class action was for people who had never received a cent.

Ian Freckelton: And how did Lyn Rowe become the lead plaintiff?

Michael Magazanik: We had good evidence for exposure. Wendy had good memories of having been given the drug. Other members of the family remembered her being prescribed the drug. One of them remembered the name of the drug.

We found the doctor who delivered her, we found the pharmacist who dispensed drugs to the family at the time. We pieced together a coherent story. So we had good exposure evidence, which is no small thing 50 years after the event.

Ian Freckelton: Who were the technical defendants?

Michael Magazanik: Grünenthal and two Distillers companies, who are now subsidiaries of Diageo. After a lot of talking, we settled this claim for full value and Diageo picked up the tab. In a sense, Grünenthal is lucky they have a responsible co-defendant in Australia.

In the book, I do speculate about why Diageo settled. I think the company is motivated by doing the right thing in relation to thalidomiders. I think you can draw a sharp distinction between them and Grünenthal.

Thalidomide’s links to Nazi Germany.

Grünenthal is going to defend these things to the bitter end. It offers insulting apologies and recently refused to contribute to the German fund for compensating thalidomiders there.

I think that Grünenthal behaves very poorly in relation to thalidomiders. For Diageo, a very rich company with a multi-billion-dollar income, settling Lyn’s claim just made sense on a whole bunch of levels.

Ian Freckelton: The litigation in Australia is completed but there has been a further investigation in Germany, has there not?

Michael Magazanik: There’s an investigation into the collapse of the criminal trial in 1970. The English thalidomiders, a very powerful group, very active lobbying group, and the German thalidomiders too are keen to get to the bottom of how the trial collapsed and how Grunenthal ended up getting immunity from suit in Germany.

There are allegations there were secret meetings between Grunenthal and the German government at which the deal was secretly stitched up in the absence of any victims and so on.

I’m personally pessimistic about whether much will flow from it but the hope is, I think, that they will find there was a stitch-up. And that somehow Grunenthal will be pressured to pay compensation to people overseas and extra compensation to German thalidomiders.

I think that Grunenthal ought to pay more to German thalidomiders and to people overseas. It was Grunenthal’s drug. Wendy Rowe swallowed the drug that was made at Grunenthal’s headquarters in Germany. Grunenthal made the drug there, exported it to the UK, packaged the raw powder into pills and sent it to Australia. Any Australian who took thalidomide was taking a German-made product.

Ian Freckelton: And what’s happened to similar claims in overseas countries?

Michael Magazanik: Right now, there is litigation on foot in the US and the UK. The US litigation has been bogged down for some time. That’s against a couple of licensees, one of whom investigated the drug and trialled it a little bit in America and didn’t proceed to market. And another one who were dead keen on proceeding to market but whom the FDA wouldn’t allow to.

The UK is moving along very slowly and it has, like Australia, the same two defendants – Diageo or its subsidiaries and Grunenthal. And that’s moving along slowly, too.

The Australian litigation ended up in a settlement. So there’s no judgment, there’s no public exposure of the evidence, there’s no judicial pronouncements on the strength or otherwise of claim and counterclaim. But what it does is give plaintiffs elsewhere hope that it’s possible. That you can mount a strong claim, you can marshal an argument and you can put forward such a claim that you force a settlement.

The other place there’s been litigation is in Spain. Actually, the Spanish thalidomiders won a case against Grunenthal the year before last, got a judgment that Grunenthal had to pay limited compensation to a limited number of Spanish thalidomiders, but lost on appeal. Grunenthal appealed, naturally, and won on appeal.

We had the Spanish decision translated, it’s still a little hard to understand, but it seems they won on appeal mostly on the basis of statute of limitations – that it was all just too long ago and a fair hearing wasn’t possible.

Ian Freckelton: Michael, thank you. Silent Shock is a riveting read, sobering, confronting, distressing. But very very accessible. Thank you for talking to us.

Michael Magazanik: Thank you.

Stay tuned for other instalments in the thalidomide series this week.