REMS: Not Just for Sleeping Anymore

The name is about as dry as a government program can be -- Risk Evaluation and Mitigation Strategies (REMS) -- but the system is saving drugmakers from going into a deep sleep while they wait for Food and Drug Administration approval of their drugs.

The Food and Drug Administration has established more than 50 REMS since it set up the system a little over a year ago. Most are simply medication guides that are given to patients with their medications. The one for Pfizer's (NYSE: PFE  ) Lyrica, for instance, warns patients about the potential for increased risk of suicidal thoughts and behavior.

But for some drugs, the REMS are more complex and take steps to ensure that doctors are prescribing the drug for the right patients and the right timeframe. For instance, before GlaxoSmithKline (NYSE: GSK  ) and Adolor's Entereg can be dispensed, the REMS require hospitals to sign up for a program, which includes education on why the drug shouldn't be prescribed long-term. Side effects and efficacy are always a balancing act, and Glaxo's ability to establish REMS allowed the FDA to approve a drug with severe side effects -- the drug causes an elevated risk of heart attacks with long-term use -- that might have overshadowed the efficacy if the agency couldn't control long-term use.

An entire class under the microscope
In addition to new drugs, the FDA has been slapping REMS on older drugs in an attempt to increase safety. Given the potential for abuse and overdose, it's not surprising that the agency decided to add REMS to 24 opioid pain medications. Johnson & Johnson (NYSE: JNJ  ) , King Pharmaceuticals (NYSE: KG  ) -- even generic-drug makers will be required to set up REMS for their pain drugs and patches.

While an inconvenience -- someone's got to write up the report -- the REMS shouldn't be a major issue, because the competing products have the same marketing issue. The companies that could benefit are drugmakers like King and Pain Therapeutics (Nasdaq: PTIE  ) that are working on abuse-resistant versions of painkillers ... if the FDA lets them on the market without REMS.

REMS as a marketing strategy
When the FDA approved Medicis Pharmaceutical's new anti-wrinkle injection, Dysport, it slapped REMS on it and asked for one on Allergan's (NYSE: AGN  ) competing botulinum toxin, Botox. Rather than fighting it, Allergan seems to be embracing the REMS.

The two drugs use different units for measuring the strength of the toxin, so the FDA wants to make sure that doctors know they can't be used interchangeably. Allergan is more than willing to push that idea, since it's been on the market a lot longer and doctors have experience with it. I can see the company changing the safety message, "the drugs aren't interchangeable," into a marketing message, "the drugs aren't interchangeable, so use the one you have experience with."

This may be a unique case, but it'll be interesting to see if this possible strategy helps other companies fight off me-too drugs in the future.

Embrace the REMS
At worst, REMS are nothing more than a bureaucratic issue at this point. At best, they can help drugmakers get drugs with potential safety issues onto the market, which should give investors added confidence in the potential for approval.

Right now, REMS seem to be delaying approvals as the FDA issues complete response letters to companies with requirements to set up REMS -- Dyax, Genzyme (Nasdaq: GENZ  ) , and Theravance have all gotten requests recently. But, as companies figure out exactly what the agency wants, the REMS shouldn't delay the approval of the drugs.

And that should help investors sleep a little easier at night.

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Pfizer is an Inside Value recommendation. Johnson & Johnson is an Income Investor pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Brian Orelli, Ph.D., hasn't lost his religion. He doesn't own shares of any company mentioned in this article. Everybody hurts sometimes, but The Fool's disclosure policy can make it all better.


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