Thalidomide was very much in use when I was born in 1961, and I have met people my own age who were affected by it. My mother says that she was offered medication for morning sickness, and wonders if her refusal to take it was a lucky escape. I once took a funeral, where the son of the deceased was my age, had my first name, but had no arms or legs. It certainly made me reflect on what might have been.
When I studied chemistry, I remember a pharmacology lecturer telling us that one of the problems with the drug was that animal testing didn't produce conclusive results. One problem is that rabbit pregnancy is much shorter than human, so the 'window' of time when the drug might cause problems is very short, and may explain why it wasn't spotted. Other reports indicated that only certain species showed the effects, such as New Zealand white rabbits.
Added to that, thalidomide has two enantiomers or optical isomers (bear with me here!) i.e. two forms which are distinct mirror images of each other. One causes the deformities, whereas the other suppresses sickness. Thalidomide included both (a racemic mixture), and to complicate things further they can apparently convert from one to the other inside the body. In biological systems this can often be an issue, as the 'fit' of one molecule into another is a vital part of how those systems work. to put it crudely, a 'right handed' version won't fit a 'left-handed' slot.
has been making a comeback (presumably with stern warnings about avoiding use in pregnancy). It has some beneficial effects in treating leprosy, certain cancers and macular degeneration - a condition where eyesight deteriorates. Perhaps the substance that caused so much difficulty will yet prove to relieve a great deal of suffering.