Miracle Cure for Big Pharma

Updated from 4:32 p.m. EST

A special panel of FDA investigators narrowly recommended the reintroduction of Merck's(MRK Quote) Vioxx painkiller to prescription pharmaceutical markets Friday. The news ignited Merck's beaten-down stock, as investors bet the government's imprimatur would hurt class-action lawsuits seeking billions of dollars in medical damages from the drug maker.

The panel voted 17 to 15 to declare the drug safe for use in certain patients. Earlier, the panel made similar determinations about Pfizer's(PFE Quote) Celebrex and Bextra painkillers, saying they also were safe for marketing. In each case, the panel recommended much stronger label warnings for the drugs.

In frenzied trading, Merck closed Friday at $32.61, up $3.76, or 13%. Pfizer gained $1.74, or 6.9%, to $26.80. Both companies are components of the Dow Jones Industrial Average, which added 31 points Friday to 10,785.

Shares of Merck and Pfizer remain down more than 30% from September, when Merck withdrew Vioxx from the market after medical studies indicated patients taking the drug had a higher incidence of heart trouble. More recently, two tests showed that Pfizer's Celebrex and Bextra can increase cardiovascular risks

Celebrex and Bextra were never pulled from the market, although the FDA urged doctors in late December to use more caution in prescribing them.

The panel voted to allow Vioxx on the market as long as physicians and patients receive an unqualified warning that the drug heightens the risk of heart attack. Merck said late Thursday that it would consider relaunching the voluntarily withdrawn Vioxx, but it will probably need formal FDA permission to do so.

"Merck has appreciated the opportunity to present data at this advisory committee meeting," the company said on Friday. "We look forward to discussions with the FDA."

Earlier Friday, the panel recommended that Pfizer's two main Cox-2 painkillers be allowed for sale. The first, Bextra, survived with support from just a minority of the experts who are making recommendations to the FDA this week. Other members of the committee either recommended banning the drug or abstained from voting.