Add to the drug industry's problems an increasingly harsh regulatory environment. More than two years after Merck & Co. (MRK) pulled its Vioxx painkiller from shelves over heart attack and stroke risks, the Food & Drug Administration is still skittish about the safety of drugs currently on the market and those coming up for review. In February regulators asked Genentech Inc. (DNA) to relabel its allergy-related asthma drug Xolair, which had $425 million in sales last year, to take stock of serious allergic reactions the drug can cause in rare cases.
A month later, on Mar. 9, the FDA imposed a strict "black box" warning on blood-boosters, one of biotech's oldest, most widely prescribed classes of drugs. These medicines, which include Amgen Inc.'s (AMGN) Epogen and Aranesp and Johnson & Johnson's (JNJ) Procrit, were approved to treat anemia in patients with cancer and chronic kidney disease. But they appear to cause cardiovascular problems when given in high doses for various conditions.
Also on the FDA's safety checklist is a raft of insomnia treatments such as Sepracor Inc.'s (SEPR) Lunesta and Sanofi-Aventis (SNY)' Ambien, which pose risks ranging from allergic reactions to "sleep driving," regulators say. In the wake of these warnings, Merck halted clinical trials of its own insomnia drug, gaboxadol, which produced hallucinations in some test subjects.
Now, Wall Street is watching to see how the FDA deals with Merck's latest arthritis drug, Arcoxia, which works by the same mechanism as Vioxx. The company was scheduled to present data to the FDA's Arthritis Advisory Committee on Apr. 12.
As warnings about existing drugs have multiplied in recent months, patients' groups and politicians have banded together to call for regulatory reform. On Mar. 14, the Senate held hearings on a bill drawn up by Senators Michael Enzi (R-Wyo.) and Edward M. Kennedy (D-Mass.) that would, among other things, increase the FDA's ability to monitor drugs after they are approved.
By Alex Halperin