TOKYO – The Japanese arm of Swiss pharma giant Novartis AG admitted to government regulators it failed to report more than 2,500 cases of serious side effects in patients who had received its leukemia and cancer drugs.

Approximately 1,313 cases were related to Glivec (imatinib) and 514 cases to Tasigna (nilotinib), two drugs used to treat leukemia, and 261 cases were connected to the cancer drug Afinitor (everolimus). Some fatal cases were included, but no figures were released, according to Japan's Jiji Press news agency.

And company employees appeared to have been well aware of the problems.

Marketing staff at Novartis KK recognized the side effects but did not report them to the division in charge, breaking the drug firm's internal rules, Novartis wrote in a statement. Staff were not fully aware of the importance of the problem and higher-ranking officials failed to supervise them properly, the company said.

Japan's Ministry of Health, Labour and Welfare (MHLW) said serious side effects must be reported within a month of discovery.

"Novartis violated the Pharmaceutical Affairs Law," an MHLW spokesperson told the media. "We will review the case, and consider heavy measures against the company."

In Japan there is a grayer line in reporting side effects than in other well regulated jurisdictions, according to Kyle Murphy, managing director and founder of KMG Japan.

"In the U.S. severe adverse effects must be reported by law," said Murphy, who has worked in Japan's health care market for more than 25 years. "In Japan, there is some discretion about which adverse side effects need to be reported.

The difference between the U.S. and Japan is subtle in this area.

"The rules pretty much read the same, but enforcement is different," he said. "In the U.S. you report everything within 15 days. In Japan the rule is similar, but Japan's Pharmaceuticals Medical Devices Agency (PMDA) has historically expected you to discriminate between the important adverse effects and the ones that are not important."

And Murphy wonders about Novartis' own numbers of more than 2,500 reported side effects.

"I think management is not taking any chances now and going through the records and reporting everything," he said.

This is the latest in a series of scandals, coming after Novartis replaced its top management in April at its Japanese subsidiary after an outside probe found employees acted inappropriately in clinical trials on a leukemia treatment.

"It seems to have been the case in the past that overseas corporations operating in Japan [in other fields] have made public scapegoats for indulging in questionable practices that are widespread throughout the industry. It is possible that this Novartis case is another such wake-up call for Japanese pharma to clean up," said Hugh Ashton, an industry watcher and author.

The University of Tokyo, which was engaged in a trial comparing the drugs Tasigna and Glivec, claimed that several Novartis sales representatives handled questionnaires during that trial, violating trial protocol that obliged doctors to process the questionnaires by themselves.

In July, the Tokyo District Public Prosecutors Office charged Novartis KK with allegedly falsifying data used to exaggerate the benefits of a popular blood pressure drug in order to become more competitive than rivals who sold similar drugs.

Former employee Nobuo Shirahashi was indicted in June on allegations that he gave false data from clinical trials to researchers and that the data was later used to promote the drug Diovan (Valsartan).

The current problem came to the attention of the MHLW when an anonymous caller from Novartis KK, reported it to them.

Speculators in Japan say the number of side effects reported could rise as Novartis probes an additional 6,000 cases.