At the Hospital for Sick Children administrators are in the midst of a swirling controversy over academic freedom and research ethics.

At the centre is one of Sick Kids' top researchers, Dr. Nancy Olivieri, a clinician at the University of Toronto. Three years ago, Dr. Olivieri made what she describes as a "very big mistake" in her effort to arrange funding for her study of a promising new drug.

She signed a confidential agreement with Apotex, Inc., a Canadian pharmaceutical company. In return for partly financing a study of the drug, deferiprone, Apotex received rights to potential sales from the drug, and Dr. Olivieri agreed that data from the study would be the company's property.

Corporate interests and research ethics began to clash when Dr. Olivieri's study suggested the drug may be harmful. And the outcome is raising serious questions about growing reliance on private sector funding for vital research.

Dr. Olivieri's interest in deferiprone was the potential it offered in the treatment of an inherited blood disorder, thalassemia. The only available treatment requires patients to receive monthly transfusions of red blood cells. But this treatment causes life-threatening complications. The iron-rich red blood cells accumulate in the body, damaging the heart and liver.

To get rid of the iron, patients are hooked up to a pump that slowly injects the drug deferoxamine for a 12-hour period every day for the rest of their lives. The new drug, deferiprone, would be administered in pill form -- eliminating the often unbearable standard treatment.

With the work financed by the Medical Research Council of Canada, Dr. Olivieri and her team had some of the compound produced and tested it on 21 of her patients. Over the next three years test results showed a steady decline in iron levels in her study group. The revolutionary findings were published in the New England Journal of Medicine in April of 1995.

But, as with any new findings in drug research, a lot more work was needed to prove that deferiprone was safe and effective with long-term use. The researchers started planning a much larger study with Apotex, in conjunction with the Medical Research Council of Canada and the U.S. National Institutes of Health. It was at this stage Dr. Olivieri signed the ill-fated agreement with the Apotex firm.

In the fall of 1995, liver biopsies in some of the Toronto patients showed dangerous levels of iron overload throwing the researchers into a panic. Toxic levels can compromise liver function and lead to scarring and life-threatening cirrhosis.

Dr. Olivieri immediately stopped giving the drug to those patients most at risk but, at the time, was convinced the study should continue in those in whom the drug appeared useful. The researchers thought the drug treatment could be appropriate for some of the patients. The only way to find out for sure was to keep the study on track and carefully monitor the patients.

When Dr. Olivieri approached Apotex with her negative findings and a request to change the patient consent form to include the contraindications, the company disagreed that the patients were at risk. Apotex opposed changing the consent form.

But when Dr. Olivieri went ahead anyway and drafted a new consent form, and forwarded it to Apotex in May, 1996, the company response was to fire her as principal investigator of the Toronto studies and as chair of the international study's steering committee. The study at the Hospital for Sick Children was halted, and Apotex confiscated the drugs from the hospital's pharmacy.

Dr. Olivieri was also repeatedly threatened with legal action if she divulged the findings to her patients. She spoke out anyway, believing that the health care of her patients was paramount. Dr. Olivieri also believed she would be supported by the Hospital. But her request for legal assistance from the institution was denied on the grounds that she had not obtained the administration's approval for her deal with Apotex.

This summer, three years after she first arranged funding from Apotex, and in spite of the manufacturer's claim that her study is seriously flawed, the New England Journal of Medicine has published Dr. Olivieri's results.

Under pressure, the Hospital for Sick Children announced that it would conduct an external review of its policies and procedures for clinical trials to ensure patient safety and scientific integrity. But the Hospital refused to allow the review to consider Dr. Olivieri's experience.

Doctors and researchers at the hospital feel such a review doesn't go far enough. Close to 140 of them have signed a petition asking for an internal hospital review that includes what happened to Dr. Olivieri.

Despite all this, Apotex is proceeding with its plans to licence and sell the drug in Canada and Europe.