Don't let it get away!
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Remember when it was really uncommon to find the Food and Drug Administration disregarding the advice of its outside experts? For instance, Dendreon's (Nasdaq: DNDN ) shares spiked when the advisory-committee panel voted in favor of Provenge, only to plummet back to earth when the FDA didn't follow its panel's advice.
Fools, those days are over.
Johnson & Johnson (NYSE: JNJ ) is the latest victim of the FDA’s tendency not to follow its panel's recommendation. Today the company announced that the FDA had rejected its current bid to expand the label of its antibiotic Doribax to include the treatment of hospital-acquired pneumonia. J&J will probably resubmit with more data in reply to the Complete Response letter. The drug is used to treat complicated internal infections and is already approved in Europe for that expanded use. Last month, an advisory panel said the drug was both safe and effective when tested for the expansion.
Johnson & Johnson's antibiotic joins Schering-Plough's (NYSE: SGP ) suggammadex and Cardiome's (Nasdaq: CRME ) Kynapid on the list of drugs that have recently received rejections even though the advisory panels voted in favor of them.
Doribax's rejection probably shouldn't have come as a huge surprise. The panel just barely recommended approval -- voting eight to five that it was safe and seven to six that it was effective. Also, the FDA has increasingly scrutinized antibiotics in the last few months, with Wyeth (NYSE: WYE ) getting a rejection for Tygacil. And approval for Theravance's (Nasdaq: THRX ) telavancin appears to be delayed indefinitely.
The take-home message for investors is that you can no longer count on the headline "FDA Advisory Panel Recommends Approval of Your Favorite Drug" to guide your investment decisions. Investors need to dig a little deeper by reading the FDA's advisory-panel briefing documents to get better insight into what the agency is thinking. And even then, don't count on it.