Does FDA Safety Initiative Aid Investors more than Patients?

"Looking at the events of the past five months, one has to now wonder if the creation and placement of the DSB [Drug Safety Oversight Board] and other changes at the FDA will protect investors more than the public. The original public outcry was about the safety of Vioxx and how the FDA (and Merck) could allow it on the market. With the independent panel of experts believing Vioxx should remain on the market but with stricter warnings, it begs the question, was all this necessary and whom do these changes really benefit?

Patient safety is probably not going to benefit much if at all from the changes at the FDA. Prior to the formation of the DSB, the burden of continued monitoring fell in large part to the pharmaceutical company due to legal worries. Patient safety and the fear of litigation is what drew Merck to pull Vioxx off the market. That drastic and major reaction by Merck caused its shares to fall over 30% from its pre-recall value.

For a company to take such a drastic step, highlights the fear pharmaceutical companies have over litigation. The DSB is now placing more of the burden of drug safety on them and this protects the financial interests of pharmaceutical companies because they may not have to act so proactively. If the DSB supports continued marketing of a particular drug, then this lowers the company’s legal risk. Now that the independent counsel has approved keeping Vioxx on the market, some of Merck’s litigation risk has diminished.

The new initiative from the FDA does not really protect consumers any more than in the past, the only thing that has changed is the shifting burden of drug monitoring. Responsible pharmaceutical companies have always monitored their drugs because of the enormous liability issues that surround a poor product. As evident with Vioxx, a company will pull a $2.5 billion product off the market to try and save itself from some litigation. Now that the burden is on a government oversight committee, we cannot expect unsafe drugs to be found any quicker or examined anymore thoroughly than the prior system.

If the DSB was in existence prior to the recall of Vioxx, we might have seen a greatly different story unfold. A story in which Vioxx was never removed from the market but just new warnings added. A story in which Merck’s shares do not fall 30%. This story shows the same amount of protection for patients as the real story but also protects the value of Merck. This new drug safety initiative might potentially protect companies but may do little to increase patient safety.

From this frost.com article.