FDA and Health Insurers Take On Drugmakers

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The U.S. has fairly rigorous standards for approving drugs, but its ability to find side effects after drugs are on the market is kind of laughable. Essentially, the agency has to count on having doctors voluntarily report side effects to catch ones that make it through clinical trials unnoticed. These side effects often go unreported because it's not clear that they're even side effects of one of the medications the patient is taking.

But not anymore. The FDA is teaming up with health insurer WellPoint (NYSE: WLP) to use the company's vast database of 35 million members' medical records to try teasing out the real side effects from all the unrelated ones. Wellpoint's Safety Sentinel System would have been more aptly named Safety Ordinal System (SOS) -- since it's certainly coming to the FDA's rescue.

No word yet on how much Wellpoint is making from the deal. It doesn't have a monopoly on the record-keeping -- UnitedHealth Group  (NYSE: UNH) and Aetna (NYSE: AET) probably have large enough databases to provide the same kind of information -- so presumably it's not making a fortune off the government.

Wellpoint back-tested its system against its database and determined that it could have discovered the heart-related issues linked to Merck's (NYSE: MRK) Vioxx in four months. That's compared to the five years it actually took before the drug was pulled from the market.

This could be seen as an attack on drugmakers -- the system probably would have slowed down sales of GlaxoSmithKline's (NYSE: GSK) Avandia or Eli Lilly's (NYSE: LLY) Zyprexa before they reached their historic peaks -- but I doubt we'll hear much complaining from the pill pushers. The companies' goals are to make money, but I doubt that they want to hurt people in the process. Besides, the system could ultimately save them billions of dollars in lawsuits.

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