prevailed over critics who wanted to yank its big diabetes drug from the market, but the mark on
name likely means its days as a top seller are over.
Vocal and impassioned dissenters from within the
Food and Drug Administration
and from Ralph Nader's
argued that the company's diabetes drug, Rezulin, needed to be pulled from the market because of liver toxicity. But an FDA advisory panel of endocrine and metabolism experts decided Friday that the drug should stay on the market with some changes in the package insert.
Many Wall Street investors and analysts came out of the meeting thinking that Warner's stock would be stronger with the threat to Rezulin defined. And indeed, in after-hours trading Friday, the stock rose to 69 1/2 after closing at 67 11/16.
"From a stock perspective, it's a net positive," says Jeff Chaffkin, an analyst with
. "But financially, it's not. We still believe Rezulin is going to decline." (Chaffkin rates Warner-Lambert a buy, and his firm has done recent banking for the company.)
Indeed, Friday's victory is, to some extent, Pyrrhic. In the long run, Rezulin remains a hobbled drug, stained because doctors have acknowledged the drug can cause a rare, fatal side effect. Some patients taking the drug -- just what proportion is still a matter of debate -- will develop liver failure too quickly to be caught by monitoring. Those patients likely will die. Of the roughly 1.5 million patients who have taken Rezulin, 43 have developed liver failure and at least 28 have died, according to the FDA.
But that figure obscures just how many liver failures actually are occurring in Rezulin patients. An FDA epidemiologist, David Graham, suggested the public data represent only a tenth of the actual cases, while the company disagreed and contended that since increased liver monitoring was recommended in July, those cases have fallen.
Nevertheless, doctors, both on the panel and in the packed-to-bursting audience, clearly thought the benefits of the drug outweighed the risks. The panel recommended some further restrictions, suggesting that Rezulin not be used as the first choice for the disease in adults, which is known as Type II diabetes. It also recommended that the drug not be used alone to treat the disease. Instead, the panel recommended the drug be used in combination with existing diabetes therapies and only after other medications have failed to keep blood-sugar levels under control.
The FDA, taking into account the panel's suggestions, will likely strengthen and simplify the language in the package insert that pertains to safety and recommend the drug be used as a second choice. The FDA has tightened recommendations for liver monitoring three times since Rezulin came on the market in early 1997.
But how Warner won the day was as much the story as what the company won.
The FDA's Graham was the center of attention. The epidemiologist forcefully made a statistical case that the drug was causing serious harm. He said the risk of liver failure could be as high as one patient in 1,800 in six months of Rezulin use, adjusted for doctors' lack of reporting drug reactions to the FDA. The company put the figure at one in about 57,000, compared with one in 36,000 in the first year Rezulin was on the market.
Graham argued that the risk was greater the longer patients stayed on the drug; the company disagreed, saying there were no reports of liver failure in patients after one year. Using data culled from
records, Graham held that doctors weren't following the stringent liver monitoring recommendations and that the cases had not dropped since July.
But Graham made extraordinarily complex statistical arguments, which perhaps some panel members didn't grasp entirely. Graham, citing numerous studies, made two extremely counterintuitive arguments: First, there were far more liver failures than the FDA's voluntary reporting system was uncovering, and second, publicity about side effects has little effect on whether doctors report such side effects to the FDA. The panel just didn't buy that there was an epidemic of liver failure going unreported. And it simply couldn't believe that media publicity had little effect on whether doctors reported serious adverse events to the FDA.
Graham's tack was almost prosecutorial, hot and contentious. He interrupted panel members and was gently rebuked on several occasions by panel chairman (aptly named) Henry Bone, the director of the
Michigan Bone and Mineral Clinic
in Detroit. As the day wore on, audience members began to say that Graham, with his round intense eyes and fervor, belonged on Ken Starr's staff.
Rezulin once was going to be well over a billion-dollar seller, used to treat and prevent Type II diabetes. From Friday on, it will be a niche weapon in a much larger struggle. Most analysts expect the drug to have sales in the range of $800 million and $900 million this year and about the same next year.
Those sales targets could easily be too high. Rezulin faces looming competition from
and Japanese drug company
. If those drugs are safer than Rezulin, as the companies
claim, they will likely absorb the vast majority of new patients coming on therapy in the glitazone class of drugs, to which Rezulin belongs.
Some patients may switch off Rezulin. Warner-Lambert said that one-fifth of the use of Rezulin was in monotherapy, or alone to treat diabetics. That portion of sales will be particularly vulnerable.
This same panel will take up Avandia and Actos in late April. Will the two new drugs be saddled with the same amount of recommended liver monitoring? Will the drugs be recommended for use alone to treat diabetes? Will they be recommended only after other drugs have failed?
"You have to ask yourself, what's the upside for the panel to give
the two new glitazones a broader label? On the flip side, if the panel believes that there is absolutely no signal
of liver disease, it may be more confident," says Kris Jenner, a health care analyst for
T. Rowe Price
. His institution is long the companies involved.