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Prozac can be prescribed for children as young as eight, the European Medicines Agency has said.
It decided the benefits outweighed the risks in children with moderate to severe depression who failed to respond to psychological therapy.
The House of Lords said 90% of medicines for new born babies and 50% of those aimed at children are untested after collating evidence from doctors.
The warning comes after the EU proposed a law requiring firms producing adult drugs to test if they can also be used to treat children.
But campaigners have been warning that children are not merely small adults and that therapeutic and side effects can vary widely with age.
Interest in this issue followed "earlier studies that reported significant increases in the use of antipsychotics by young people within the Medicaid population," the researcher added. "We wanted to find out if this was a general trend that more broadly affects the mental health care of youths in the US."
The researchers note that these drugs were prescribed primarily for disruptive behavior disorders (37.8 percent), mood disorders (31.8 percent), or pervasive developmental disorders or mental retardation (17.3 percent). Only 14.2 percent were prescribed for psychotic disorders.