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The decision late last week by the FDA to encourage Abbott Laboratories (NYSE:ABT) to withdraw its Meridia diet pill has obvious implications for other drugmakers seeking approval for obesity drugs. But will those companies gain or lose? The answer will depend on the extent to which the FDA sees the need to offer more options to fight fat while weighing (pun intended) pressing safety concerns.

On one hand, there are few options available to overweight Americans: Roche’s (OTCQX:RHHBY) Xenical, which is also sold over-the-counter by GlaxoSmithKline (NYSE:GSK) as Alli, and phentermine, the surviving half of the infamous fen-phen weight-loss cocktail (the other half, fenfleuramine, along with a chemically related pill were both recalled in 1997 due to serious heart and lung side effects). But these are only modestly effective and for more than a decade, new treatments have been lacking.

Given the clamor over obesity and links to diabetes and heart disease, the agency remains concerned with finding salves that address a public health need, an issue expressed repeatedly during recent meetings of the FDA’s Endocrinologic and Metabolic Advisory committee. This could provide a boost to Orexigen Therapeutics (NASDAQ:OREX), which hopes the panel will recommened its Contrave pill during a scheduled December review. Theoretically, this could also benefit Vivus (NASDAQ:VVUS) and Arena Pharmaceuticals (NASDAQ:ARNA).

On the other hand, the emphasis on safety - notably cardiovascular safety - may work against Arena and Vivus, whose drugs were recently rejected by the same FDA panel. Last month, the committee decided that the risks of Arena’s Lorqess pill outweighed the benefits, after raising concerns about valvulopathy as well as links to malignancies in rats at high doses. Last July, the panel rejected the Vivus Qnexa pill due to concerns about usage by pregnant women and psychiatric side effects.

Meanwhile, the FDA is creating a draft guidance for obesity drugs, but does not intend on lowering the efficacy threshold, which is 5 percent or greater weight loss for patients compared with placebo. One way to interpret this is that the hurdles are high. The wags at Prevision Poilcy, a healthcare analysis firm, see it this way: This “reinforces our belief that any new obesity therapy that hopes to get through FDA will need to have formal patient controls and monitoring as a key piece of the premarket approval package.”

However, imposing a risk management strategy, otherwise known as a REMS, may not automatically confer approval. In discussing the options for Meridia, FDAs Deputy Director for Safety Amy Egan, who works in the Division of Metabolism & Endocrinology Products, wrote that FDA Office of Surveillance and Epidemiology’s Division of Risk Management concluded that Abbott’s proposed REMS “would be unlikely to have a large impact on preventing cardiovascular risks.” Why? One reason is cardiologists on the FDA advisory committee noted that ruling out cardiovascular disease in patients prior to prescribing sibutramine is not feasible (read the memo [pdf]).

In other words, Arena and Vivus may not automatically benefit just because Meridia is no longer available. The agency appears ready to insist that safety issues remain a high priority and these will trump demand. The Meridia withdrawal also undermines the notion that imposing a REMS will become a catch-all solution for every troubled drug, an idea that was debated after the recent decision to allow the controversial Avandia diabetes drug to remain on the market with numerous restrictions. The goal of fightiing fat is not diminished, but the agency is essentially saying not at any cost.

Disclosure: None

Source: Will Abbott's Meridia Withdrawal Help or Hurt Diet Pills?