When two government advisory committees meet this week to discuss arthritis drugs known as Cox-2 inhibitors, the hearings -- and eventual verdict by the Food and Drug Administration -- may focus as much on how to find a better patient as on how to make a better drug.

The hearings are a response to

several Cox-2 controversies.

Merck

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pulled Vioxx on Sept. 30 after a company-sponsored test showed increased cardiovascular risks among patients taking the drug for more than 18 months. More recently, two tests showed that

Pfizer's

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Celebrex and Bextra can increase cardiovascular risks, even though most research says the drugs don't elevate these risks. The hearings by two FDA panels meeting jointly will be held Feb. 16, 17 and 18.

The data being presented to the advisory panels, as well as data that have spilled out in medical journals and in congressional hearings in recent months, suggest considerable shades of grey in the debate over whether all Cox-2 drugs should be banned or restricted.

"The issues raised by the data relate to the whole class of drugs," said Ira Loss, a health care analyst and senior vice president at the Washington Analysis Corp. research firm. "To me, there is a class effect, but I don't think that disqualifies these drugs from being on the market." He doubted that the FDA would order Celebrex or Bextra removed from the market.

Until the FDA acts, the agency is promoting its health advisory, issued in late December, that asks doctors to

be more judicious in prescribing Bextra and Celebrex.

"These hearings represent an effort by the FDA to shift the discussion from the theater of a congressional hearing to a scientific hearing," said Loss, referring to a

Senate Finance Committee hearing in mid-November when senators grilled FDA officials and Merck CEO Raymond V. Gilmartin. "A lot of theatrics will be missing."

How Much Damage?

The turmoil surrounding the Cox-2 drugs -- contradictory test results, product liability lawsuits, congressional hearings, critics' calls for bans -- has raised questions that won't necessarily go away even after the FDA acts.

"There's been quite a lot of damage to the reputation" of the drugs, the companies and the FDA, said Joshua P. Cohen, senior research fellow for the Tufts Center for the Study of Drug Development. The Cox-2 revelations come at a time of rising suspicion of drug companies due to the public's belief that drug prices are too high. "The climate was poisoned before Vioxx," Cohen said. "I expect it to linger for a long period of time."

The climate on Wall Street is marked by uncertainty, with analysts betting that the FDA will place greater restrictions on the labels of Bextra (likely) and Celebrex (probably). If the FDA says the drugs deserve black-box labels -- the strongest action short of removal -- the number of potential patients will be sharply curtailed and the companies' advertising will be severely restricted, especially on television. (Bextra has a black-box warning for a rare and sometimes fatal skin disorder. The FDA recently added a less severe warning, referring to one study showing that Bextra plus another Cox-2 drug raises the cardiovascular risk of heart bypass surgery patients. Bextra isn't approved for any surgery in the U.S.)

For several months, analysts have been downgrading assessments of Cox-2 sales' prospects. Drug industry watchers at Morgan Stanley, Citigroup Smith Barney and Credit Suisse First Boston, for example, have recently issued research reports predicting that sales of Celebrex and Bextra could each fall by as much as 50% from 2004 to 2005. If the FDA imposes severe restrictions, revenue could continue to fall.

And don't forget about the European equivalent of the FDA, which is reviewing all Cox-2 drugs, including Merck's Arcoxia, which is available in 48 foreign markets, and Pfizer's Dynastat, which is available in 45 foreign markets. Merck and Pfizer have asked the FDA to approve the drugs. Given the current regulatory climate, quick approval is unlikely.

Another Cox-2 drug that can expect a delayed U.S. introduction is Prexige from

Novartis

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. It's now available in 21 other markets. Novartis sought FDA approval in late 2002, but the agency

asked for more test results. It is reviewing those findings.

The Ultimate Test

Regardless of what the FDA does, the final verdict will depend on how worried patients are about taking the medications, how confident doctors are in the drugs' safety and how willing insurers are to pay for the drugs.

"If managed care organizations decide to significantly change reimbursement patterns for these drugs ... that may also be material to the company," said Robert Hazlett, of SunTrust Robinson Humphrey, in a Jan. 25 report analyzing Pfizer and its Cox-2 products.

Insurers assess drugs on their relative cost effectiveness: If several products are similar in safety and efficacy, insurers will place a low patient copayment on the cheapest medication (such as a generic) and a higher copayment on the more expensive product.

Sometimes they take a tougher stand. One week after Hazlett issued his report, the University of Michigan sharply curtailed its use of Bextra. The university, which had alerted physicians and patients to its intention in mid-December, cited Bextra as having "unresolved safety concerns."

The University of Michigan Pharmacy Benefit Advisory Committee removed coverage for the 10-milligram dose of Bextra. It said the 20-milligram dose would be covered only if a doctor gave prior authorization, only for menstrual cramps and only in limited doses.

Kaiser Permanente Medical Group, based in Oakland, Calif., took the Bextra rebuff one step further. On Jan. 28, it told its pharmacies to stop prescribing Bextra for new prescriptions effective Feb. 1 and for refills as of March 1.

Kaiser

had allowed pharmacies to continue dispensing Vioxx until Merck removed the drug. Kaiser permitted Vioxx prescriptions even though Vioxx had been the subject of more criticism than Bextra over a longer period of time.

Bextra is the first FDA-approved drug banned by Kaiser, which still permits doctors to prescribe Celebrex. The impact, however, will not be great because Kaiser has been discouraging the use of Cox-2 drugs for years. In an interview with

TheStreet.com

in December, a top Kaiser medical officer said the "evidence to support the effectiveness of Cox-2 drugs has been very weak" compared with that of older pain relievers such as Motrin or Advil.

Kaiser had been recommending that Cox-2 drugs be restricted to patients who suffered gastrointestinal problems with the older pain relievers. (Vioxx was the only Cox-2 drug to carry an FDA-approved label saying the drug had fewer gastrointestinal side effects than typical pain relievers.) When Merck pulled Vioxx, Kaiser recommended that Vioxx takers switch to older pain relievers, plus drugs such as Prilosec, to reduce stomach distress.

If more insurers follow Kaiser's lead, and if government-sponsored health plans take similar action, then all of those Wall Street predictions about declining Celebrex and Bextra sales could be understatements.