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35+ years as a private investor, college finance/economics adjunct lecturer, corporate project engineer and business development strategist, individual and small business tax preparation. Corporate experience in communications and energy BS Mechanical Engineering - Carnegie Mellon University MBA... More
  • GlaxoSmithKline Thinks Avandia Deserves A Second Chance 0 comments
    Jun 23, 2013 6:20 PM

    Avandia, a type 2 diabetes drug with a troubled history, underwent an FDA Advisory Committee review two weeks ago. The drug, developed and marketed by GlaxoSmithKline (NYSE:GSK), has been selling since 1999. It had been the best selling diabetes drug ever, peaking at over $3 billion in sales. However, evidence that there was a direct relationship between Avandia and heart attacks surfaced in the New England Journal of Medicine. In a 2007 study, results showed a 43% increase of heart problems in a sample of patients using the drug.

    As a result of the NEJM article:

    • In 2007, a black box warning that Avandia may cause increased risk of heart attacks was added.
    • The EMEA, the equivalent of the FDA in Europe, removed the drug in 2010.
    • That same year (2010), the FDA placed greater restrictions on Avandia's use, but continued to allow some sales. The restrictions came to be known as the Risk Evaluation and Mitigation Strategy (REMS).
    • In the meantime GSK paid the FDA a $3 billion fine for fraud, for trying to keep all the heart problems from coming to light.

    The charts below reflects the 2010 judgments on GSK's earnings (adjusted earnings per share in pence)

    Data chart

    Chart forGlaxoSmithKline plc

    Glaxo's stock price peaked in late 1999, about the same time as Avandia sales started hitting the bottom line. It also is readily evident that since the restrictions were placed on Avandia, both in Europe and in the United States, the stock has only recently moved from a long basing period.

    GSK has claimed that study was inconclusive and countered with their own study, dubbed "The Record."

    This latest Advisory Board hearing was requested by GSK to consider the "Record" study review done by the Duke Clinical Research Institute that shows no relationship between the cardiovascular risks and Avandia, purported in the 2007 study.

    GSK petitioned for the removal of the black box warning as well as the drug's reinstatement without the close scrutiny of an oversight physician. The additional FDA imposed restrictions in 2010 (REMS), mentioned above, required that all other type 2 drugs had been tried and failed for a diabetic before Avandia could be used. The patient must also consent to knowing the cardiovascular risks before being allowed to take the drug.

    The FDA has not yet agreed to a policy change for Avandia. Several weeks ago, it called together 26 experts, a combination of the Endocrinology's and Metabolic Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee to decide whether the now larger body of evidence connects the drug to heart attacks in a statistically significant manner.

    The representatives of public awareness groups have been insisting on the warning and many have been calling for the total removal of the drug in the U.S.

    The combined advisory group, after listening to the evidence provided by both sides, recommended fewer restrictions on the use of Avandia. The breakdown of the Advisory committees voting showed :

    • 7 wished to remove the Risk Evaluation and Mitigation Strategy (REMS).
    • 13 thought the REMS should be modified and made less restrictive.
    • 5 members voted to continue the REMS.
    • 1 member thought Avandia should be withdrawn from the U.S. market.

    Where are the checks and balances in the New Drug Approval process at the FDA?

    The scientific probability and statistical analysis is inherent in the FDA process in clinical trials. Safety, dosing and manufacturing consistency must be varied and proved. After the trials conclude, the NDA is submitted, the advisory committee advises, then the FDA decides. There is no check nor balance. The FDA has final veto power over the Advisory group, although they usually agree, but not always.

    When the FDA denies or delays a drug approval, the inability to use that drug can potentially let people die, who otherwise might have lived longer and healthier lives. When the FDA approves a drug, unwanted side effects likewise have the potential of ending someone's life.

    What the FDA should balance is the probability of lives saved, extended or improved versus the probability of lives, lost or impaired. That task is the FDA's fundamental raison d'etre. The FDA always wins and always loses, with every decision. It has a monumental task and responsibility.

    The problem with the spokespeople, supposedly representing the public awareness groups, is that they are always on the side of denying or rescinding drugs for use. Where are the advocates for allowing people the drugs, the counterparts, who do not profit monetarily from delay, denial or approval?

    Some might argue that the drug companies are the representatives of those who would risk their lives in the hope of finding a new medicine that actually helps them. But the drug companies and their battalions of lawyers really have their own interests at heart. They would like to see any drug that helps fight any disease on the market so they can recoup their investment.

    On the other side are the pharmaceutical companies with a competing drug on the market. They certainly benefit if there is one less offering in the marketplace, taking market share.

    It seems that whatever balance existed has been lost. The FDA listens to the hordes of scaremongering groups and turns a deaf ear to the few who call for help.

    Much of the blame stems from the antagonism toward the self-righteous attitude, "I can do anything I want" executives whose shareholders expect immediate results and whose salaries have become out of touch. Regulation itself is awkward in that the pharmaceutical companies ironically fund the regulators' operations that can deny them future revenues for all their research and development.

    The Robin Hoods of the public health advisory sector should be forced into two equal, well funded Public Citizens Groups:

    1. A new group looking into putting drugs on the market for those who would risk the side effects and wave future liabilities,
    2. The other, as it does now, tasked in denying dangerous drug approvals and removing those drugs, already approved, with deadly side effects.

    That would be a good first step toward a checked and balanced review of the FDA's decisions. They could use more assistance, not more rebellion and certainly fewer lawsuits.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I have never worked for the FDA nor any pharmaceutical company and have no business relationship with any of the companies or regulators mentioned in the article. I do have Type 2 diabetes and manage it with diet and exercise.

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