The agency responsible for monitoring the safety of medicines in the UK faces allegations it is failing to protect patients.
Panorama said trials showed Seroxat could be addictive
A BBC Panorama investigation claims vital information relating to the anti-depressant Seroxat was overlooked.
It suggested the drug could be addictive and increase suicidal feelings in young adults
The Medicines Healthcare products Regulatory Authority (MHRA) has rejected the criticisms.
Panorama claims that trial results contain evidence that Seroxat can leave a quarter of all users addicted, that it may increase the risk of suicide in young adults and that rapid increases in dosage can cause serious side effects.
Some of this is evidence that Panorama claims the regulator could have spotted years ago as it had some of the confidential clinical trial information since before the drug was licensed 13 years ago.
The chief executive of the MRHA, Professor Kent Woods said: "There is concern in children and adolescents that there is an increased risk of suicidal ideas, specifically on Seroxat.
"And for that reason we gave advice to doctors and their patients in June of last year that the drug was contra-indicated in children and adolescents.
"But in adults the evidence is not clearly there and we are talking purely on a precautionary basis that this form of treatment - as with any other form of anti-depressant treatment - should be carefully monitored during the early weeks," Prof Woods told BBC News24.
He said Panorama's claim that the regulation of drugs was a secretive business which does not put safety of patients first was "completely inaccurate".
Outlining the scientific and parliamentary scrutiny that the MRHA operates under, Prof Woods added: "The suggestion that we are secretive or that we are not being forthcoming in relation to data on patient safety is quite false."
Concerns about the drug have been raised by patients and medical professionals.
The head of a leading mental health charity also told Panorama that the MHRA, the UK's medicines watchdog, was not doing its job properly on drug regulation.
Richard Brook, of Mind, said he had "little confidence" drugs were being licensed in a way he found appropriate.
He was part of a group reviewing the safety of anti-depressants and was the first patients' representative ever to sit on one of these reviews, but resigned from the MHRA earlier this year.
Mr Brook told the BBC: "I have little confidence that the drugs they're licensing day-by-day are being licensed in a way that I would feel appropriate and I have very little confidence in drugs that have been regulated in the past."
Speaking about the debate surrounding Seroxat, Dr Mike Shooter, President of the Royal College of Psychiatrists, said: "It has serious implications for the whole of psychiatry, it has serious implications for the whole of medicine.
"I think a few years down the line we are going to be talking about this with many more sorts of medication."
An internal MHRA investigation is currently considering whether GlaxoSmithKline, which makes Seroxat, acted promptly enough in handing over crucial safety information about Seroxat.
GlaxoSmithKline said it hoped people would not be deterred from seeking treatment for depression and other psychiatric disorders.
It added: "Seroxat is a serious medicine designed to treat serious psychiatric diseases that cause many thousands of premature and often preventable deaths around the world every year.
"The effectiveness of Seroxat has been demonstrated in clinical trials involving more than 24,000 people and through its use in tens of millions of patients over more than a decade.
"As with all important medicines, Seroxat and other SSRI anti-depressants can cause side effects in some people."
Panorama: Taken on Trust was broadcast on BBC One at 2215 BST on Sunday, 3 October.