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When the Status Quo Is a Big Win

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Hear that? It's silence. No buzzer of rejection.

Amgen (Nasdaq: AMGN  ) and Johnson & Johnson (NYSE: JNJ  ) seemed to get through the FDA advisory panel process without much problem yesterday.

Their anemia drugs -- Amgen's Aranesp and Epogen and J&J's Procrit -- were under review by a panel of experts because a recent study suggests Aranesp might increase the chance of having a stroke in predialysis patients.

The panel voted 15-1 that the drugs should continue to be used before dialysis and 9-5 against lowering the threshold at which the drugs are used in predialysis patients. The lack of a rejection results in upholding the status quo, which is certainly a win for the companies.

Compare that to GlaxoSmithKline's (NYSE: GSK  ) Avandia, where the panel split on various degrees of restrictions, and the agency slapped such tight restrictions on the drug that it won't be used by very many patients. Abbott Labs' (NYSE: ABT  ) Meridia's fate was worse. Its advisory panel split 8-8 on whether to keep the drug on the market, and the FDA sided with the safer half and asked Abbott to pull the drug off the market.

Of course, a positive panel vote doesn't mean the drugs are home free. The panel only makes a recommendation, after all.

Assuming the FDA does keep things the same, it's a win not just for Amgen and Johnson & Johnson but for the entire industry. The agency has become more safety conscious over the last few years, and keeping the status quo should give investors confidence that the agency hasn't gone overboard.

Sure, there's one trial that suggests there might be a problem with the drugs, but that's not enough evidence in my opinion to restrict their use. The panel of experts seems to agree. Let's hope the FDA does, too.

GlaxoSmithKline is a Motley Fool Global Gains pick. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson, which is a Motley Fool Income Investor pick. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of GlaxoSmithKline and Johnson & Johnson and has a disclosure policy.

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