The drug at the centre of an inquest into six epilepsy deaths was made at a plant in India which was investigated for significant quality control problems in 2017.
Medsafe knew and did its own investigation - but it did not tell Pharmac, which went on to give the company a contract to be the sole supplier of the drug in New Zealand.
The revelation comes as Medsafe takes the stand today in an inquest by the Chief Coroner into the deaths of six epilepsy patients.
Investigative Journalist Guyon Espiner has been following this story for the last 18 months and speaks to Corin Dann.