Decision Day

Decision Day

Today is the day everyone has been waiting for, the day the panel votes on whether or not to withdraw Avandia from the market. However, Diabetic Investor believes no matter what the panel recommends GlaxoSmithKline (NYSEGSK) has already made the decision to pull the drug voluntarily no matter what the panel recommends. Yesterday we learned that GSK has settled 10,000 lawsuits related to Avandia for $460 million, an amount far below what many legal experts anticipated.


All along Diabetic Investor believed GSK was more concerned with their potential legal liability than saving Avandia. As we have noted on several occasions for all practical purposes the drug is dead here in the US and no matter what the panel decided the company sought to avoid a huge legal bill. While this settlement does settle every case against Avandia it does provide the company with a fixed cost they can easily handle.


As far as yesterday’s meeting it went pretty much as Diabetic Investor expected and no major surprises. As Diabetic Investor predicted before the meeting even began everyone set out to mark their territory, GSK did their best to defend Avandia and to hold off being portrayed as the big bad pharma company more concerned with profits than patient safety. Also as expected panel members and attendees needed an advanced math degree to understand the battle of statistics. Finally it should surprise no one that the major players who started this whole situation, Nissen and Graham, had their fair share of face time on TV.


Not to be outdone and pushed out of the spotlight senators Max Baucus and Charles E. Grassley released a letter they wrote to Margaret A. Hamburg, Commissioner of the FDA, outlining more atrocities committed by the evil emperor GSK. It seems that these distinguished Senators along with Dr. Nissen have made their mission in life to paint GSK as some sort of criminal enterprise intent on ruining the world. Granted the more we know about how GSK handled this situation the more it becomes clear they were less than forthcoming but it’s a major stretch to believe that GSK intended anything other than making Avandia a successful drug and did not intentionally intend to harm anyone.


So once again we ask a simple yet basic question- Will any good come from this whole mess? Looking at the settlement which comes out to $46,000 for each member of the suit, which is before the lawyers get their cut, we would say the answer is no. After legal fees, which normally amount to a third of the settlement, patients will actually see about $31,000 which thankfully won’t be lowered any further by taxes as settlements from class action suits are not subject to taxes. Meanwhile the lawyers will come out just fine as they will pocket nearly $152 million in fees.


The FDA certainly won’t come out of this any better as no matter what they eventually decided questions will asked as to why they let this situation get to this point in the first place. As we have noted previously the FDA is in the classic no win situation. Should the panel recommend Avandia be withdrawn from the market the agencies critics will ask why they didn’t catch this problem when the drug was going through the approval process. Should the panel vote in favor of keeping Avandia on the market, a more likely scenario given that four of the five possible answers to the critical question allow Avandia to remain on the market, others will criticize the agency for wasting taxpayer’s time and money. Perhaps worst of all the public has been exposed to the inner workings of the FDA, whose members haven’t been shy about airing the agency’s split position on Avandia.


GSK certainly won’t see anything good come from all this. Next to BP, GSK is the now the second most hated British company to do business here in the US.


It’s hard to see any benefit at all coming to the millions of patients who took Avandia and the physicians that treat them. As it’s fair to say this controversy has done more harm to diabetes care and that patients are even more reluctant to remain compliant with their therapy regimen.


Diabetic Investor doesn’t want to be overly negative here and does see some winners here. The folks at Merck (NYSE:MRK) for sure are winners as their type 2 drug Januvia continues the luckiest streak ever. Does it surprise anyone that Merck has been running full page ads promoting Januvia while this meeting has captured the national spotlight? Januvia may not be the best type 2 drug available and Diabetic Investor has never been impressed with the drug, however at the moment its side effect profile has been rather tame compared to Avandia. That is until a few years today another meta-analysis comes along questioning Januvia.


It’s also possible, but unlikely, the FDA just might learn that while two drugs are from the same class they can perform quite differently. While Avandia and Actos are from the same class of drugs, Actos has come away relatively unscathed. Perhaps the FDA will apply this lesson to their upcoming decision for Bydureon from Amylin (NASDAQ:AMLN). While Bydureon and Victoza from Novo Nordisk (NYSE:NVO) are both GLP-1’s, that does not mean both deserve a black box warning for a possible link to thyroid cancer.  Amylin should not suffer just because the FDA was overly conservative with Victoza or that Novo handled this issue so poorly when they faced their panel on the drug.


Diabetic Investor is not overly optimistic this will happen given the pressure the FDA is under and the ultra conservative stance the agency is taking with diabetes drugs. The way things are going at the agency we’re surprised they haven’t recommended that people riding a stationary bike be required to wear protective head gear in case they are stupid enough to fall off. 

Finally many have made this situation in to some type of grand statement about the FDA and the Obama healthcare plan. To Diabetic Investor this is vastly overstating the importance of this meeting. The fact is after two years no objective observer can state unequivocally that Avandia increases adverse cardiovascular events.  There is evidence to indicate that Avandia should not be used in certain patient populations but to state that Avandia should not be used at all is not supported by the scientific evidence.


The facts are that Avandia was doomed from the start when someone leaked the story and then Congress got involved. Because of the Congressional hearings and this rush to judgment there was no time for a serious debate between experienced diabetes researchers and experts. Frankly GSK was placed in position of proving a negative which is a next to impossible situation no matter what they did. Somehow everyone accepted the original meta-analysis without seriously considering the drawbacks and limitations of meta-analysis. Instead of a true debate the situation quickly became a circus where Avandia and GSK were guilty until proven innocent.


Diabetic Investor agrees that the FDA needs some serious reform but this is not the way to accomplish that goal. If things play out as we expect heads will roll at the agency as politicians like to show the voters back home they are holding government employees accountable. But this will not advance reform merely transfer the problem to a new group of suckers who are crazy enough to accept a position at the agency. If anyone seriously believes that this is a people problem and not a structural problem with the agency itself they haven’t been paying attention. The last time we looked its ok for people within the agency to disagree; these disagreements when handled properly can foster serious debate which ultimately can lead to better decisions.


Unfortunately the FDA is just one more example of how dysfunctional our government has become. It’s not surprising that FDA staff members have become ultra conservative as they are more concerned with being racked over the coals should a problem develop with a drug or device they approved. Frankly it’s safer to take the conservative route even if that means patients may be denied a promising new drug or device.


The facts are that no one knows for sure the long term side effects of any drug especially for drugs used to treat a chronic disease like diabetes. It wasn’t until Avandia and Actos were on the market for over seven years that we learned both drugs showed an increase incidence of bone fractures, something that never showed up during the clinical trials. As rigorous as the approval process is for new drugs there is no realistic method to insure that a problem won’t become known until the drug has been on the market for several years. The FDA is supposed to weigh all the available scientific evidence when making their decision. The reality is even then no one can guarantee that any new drug is completely safe.


The truth is that people want absolute certainty that the drugs they take won’t harm them. When they ask their physician if the drugs they are taking are safe, they want a simple yes or no. As nice as this would be it is also unrealistic, especially in today’s environment when we seemed to have forgotten something called risk/reward analysis. The fact is when it comes to diabetes more than two thirds of all patients are not under control and this has devastating consequences.


Some balance needs to be brought to the system so that patients are not denied new drugs that could more effectively control their diabetes while at the same protecting these same patients from a drug that could do more damage than their diabetes being uncontrolled. Not a simple task by any means and one that will not be helped by anything that’s been going on in Washington these past two days.  Now is the time for serious leadership and not grandstanding. As Thomas Cronin stated; “Leadership is generally defined as the capacity to make things happen that would otherwise not happen.”


Sadly what we we’re seeing these past two days is best summarized by something Dean Rusk once said; “The major problem facing bureaucracy is not the struggle for power but the evasion of responsibility; bureaucrats are very reluctant to take action.”