Spitzer Chases Glaxo

The hits just seem to keep on coming for the drug industry. The latest body blow came yesterday as New York Attorney General Eliot Spitzer filed suit against GlaxoSmithKline (NYSE: GSK), alleging that the British drug giant withheld information that raised questions about the effects of its antidepressant drug Paxil in children.

Spitzer, known for his crusading against corporate fraud on Wall Street, claims Glaxo suppressed the results of studies that showed Paxil was not effective in treating children, and that the drug may increase the risk of suicidal thinking and acts. Glaxo has denied the charges.

Only time will tell if Spitzer's claims have merit, but in somewhat good news for Glaxo, one aspect of his charges may be moot. A news piece recently aired on PBS's News Hour suggests that the link between antidepressants and suicide in children taking the drugs is far from clear. At the moment, only Eli Lilly's (NYSE: LLY) Prozac is approved by the FDA for the treatment of depression in children. However, physicians have the freedom to prescribe antidepressants approved for adult use, such as Paxil, Pfizer's (NYSE: PFE) Zoloft, and Forest Laboratories' (NYSE: FRX) Celexa, to children. Certain groups may believe these pharmaceuticals could be related to suicide in children, but the FDA and other experts are not so sure.

One of the reasons for confusion on the suicide/antidepressant link is that such drugs often cause what is known as the "rollback phenomenon." The phenomenon refers to the fact that in the first one or two weeks after an individual begins taking antidepressants, the risk of suicide often increases. This is because those taking the drugs suddenly have more energy, but their mood has not yet improved, so they may be more prone to follow through with suicide. Some believe the rollback phenomenon is to blame for many of the suicides by children taking the drugs.

In the end, Glaxo will still have to answer to Spitzer's charges. No doubt the bad publicity will continue to hit the stock. But at least investors can take comfort in knowing that the connection between childhood suicide and antidepressants remains an open question.

How will the charges affect GlaxoSmithKline's stock? Will Spitzer's charges stick? Talk it over with other Fools on the GlaxoSmithKline discussion board.

Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.