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Drugmakers Wait For FDA to Rule

From News & Observer (Raleigh, NC) (March 6, 2011)

March 06--Federal regulators approved 21 drugs last year, the smallest total since 2007, and the tougher stance could have a dampening effect on the Triangle's economy.

The Food and Drug Administration is under pressure to protect patients, especially in the wake of high-profile health problems caused by controversial medicines such as the painkiller Vioxx and the diabetes treatment Avandia.

But increased scrutiny by the FDA is creating more uncertainty among drug developers and investors. Those worries could weaken interest in research and lead to less investment and fewer jobs at local companies.

This region is home to one of the country's largest concentrations of pharmaceutical and biotechnology research and business. Companies range from small startups spun out of universities to massive corporations such as Glaxo Smith Kline and Talecris Biotherapeutics.

This week, two Triangle drug companies, Salix Pharmaceuticals and GSK, expect to receive word from the FDA that will help determine the fate of key medicines with the potential to be worth billions of dollars.

Salix officials warned last month of disappointing news: The FDA will say it isn't ready to approve an existing drug as a new treatment for irritable bowel syndrome. The setback caused the company's stock to drop more than 20 percent.

The FDA also is expected to rule on Benlysta, the first medicine to treat lupus in more than 50 years. The drug, which was developed by GSK and partner Human Genome Sciences, is expected to reach annual sales of more than $2 billion if it wins approval.

An FDA advisory panel recommended approval last year, but the agency announced in December it needed three more months to make a decision.

Congress passed a law in 2007 that gave the FDA more authority to enforce drug safety, even after it approves a drug for patients. The agency can require more tests and order companies to provide more oversight of medicines, all of which can increase costs.

"In this regulatory environment, such hurdles to investment in development may be too high for smaller biotech companies to clear," Deirdre Connelly, GSK's president of North American Pharmaceuticals, recently told a biotech conference in Raleigh. "Even large companies are choosing to give up on research if the cost is too high."

GSK has spent the past several years cutting costs, including hundreds of local jobs, to offset slower revenue growth, lower reimbursement rates and increasing competition from generic drugs.

Patients accept risk

Health advocates and other critics say the FDA’s tougher policies toward new drugs are long overdue and are saving lives. But many patients and physicians say it’s causing hardship.

Some diseases, including lupus and irritable bowel syndrome, or IBS, have limited treatment options. And people who suffer from such ailments say they're willing to accept risks that come with almost every drug.

Salix's Xifaxan is already approved to treat travelers' diarrhea and hepatic encephalopathy, a rare liver condition. The results of a major clinical trial, which the New England Journal of Medicine published in January, showed success in treating IBS.

Since Salix announced that the FDA would likely delay approval of Xifaxan for IBS and require further testing, doctors, patients and patient advocacy groups have been lobbying the agency and Congress.

Several other promising medicines for IBS have been blocked or delayed by the FDA, Jeffrey Roberts, president of the IBS Self Help and Support Group, wrote in a letter to the agency. The group has 41,000 members.

"I believe (again) there is a lack of understanding about the quality of life issues facing an IBS patient each and every day and the risk(s) that IBS patients are willing to accept for access to a medication," Roberts wrote.

Salix officials are waiting to get more details from the FDA this week. Analysts expect Salix could scrap efforts to get new approval for the medicine if further testing would be too costly. And the company will probably cancel plans to hire additional employees to help sell and promote the drug.

"This development was unexpected and disappointing to the company, as we imagine it will be to our employees and stockholders," Salix CEO Carolyn Logan said on a conference call with analysts. "We also are concerned for the many patients suffering from [IBS] and the physicians who treat them, who have limited approved treatment options."

Industry pushes back

Drug industry officials are calling on lawmakers to consider ways to reduce the regulatory hurdles imposed by the FDA.

"Many constituents have raised concerns with me regarding the lack of regulatory certainty and transparency at FDA," Republican Sen. Richard Burr said in a prepared statement. "A lack of predictability and unnecessary delays do not benefit patients or encourage innovators to work with the FDA to pursue life-saving drugs and devices. Regulatory certainty is critical for our nation's patients and maintaining America's leadership in medical innovation."

Steady at the FDA

The FDA's standards have not changed, and the agency's approval rate has remained steady for the past several years, spokesman Sandy Walsh said. In 2007, the FDA cleared 19 new drugs, the fewest in 24 years.

"All applications are judged on their own merits based on the data and related information submitted to the FDA," she added.

It can cost more than $1 billion to test and bring a new medicine to market. Many fail long before reaching the final FDA review process, wiping out millions spent on research and clinical testing.

Last month, Inspire Pharmaceuticals of Raleigh announced it would cut 65 jobs, or a quarter of its work force, after a disappointing clinical trial of an experimental cystic fibrosis drug.

Research opportunities

Beyond safer drugs, there are other potentially positive outcomes from a tougher FDA.

For starters, the Triangle is home to dozens of companies that help drug makers test experimental medicines. Those contract research organizations, such as Quintiles, Inc Research and PPD, have seen a big boost in business as the FDA requires more clinical tests.

And while big drug companies, with their huge fixed costs, are suffering as fewer blockbuster drugs make it to market, it’s creating opportunities for smaller companies with promising products, said Richard Kouri, executive director of BioSciences Management at N.C. State University.

Some small companies can succeed with drugs that treat 50,000 patients, rather than needing millions of potential patients to make a profit, he said.

"We have a pretty strong entrepreneurial spirit and structure in the Triangle," Kouri said. "We have great strength in our idea factories, the universities."

But investors are increasingly reluctant to make bets on startups that face the "regulatory zeal" the FDA is demonstrating, said Dennis Dougherty, a veteran venture-capitalist with Durham's Intersouth Partners.

He expects broader efforts to reduce burdensome regulations at the federal level will include some restructuring of the FDA's role.

"Venture capitalists are paying more attention than ever to the FDA hurdles and regulatory risk companies will face," he said. "We'd like to see them have an attitude of helping companies meet the requirements of providing safe and effective drugs, and maybe a little less of an adversarial position."

Staff writer David Bracken contributed to this report. or 919-829-4572

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Posted: March 2011