Pfizer Pforgot What It Learned in Kindergarten

You remember that book, All I Really Need to Know I Learned in Kindergarten? Well, Pfizer (NYSE: PFE  ) seems to have forgotten the bit about coloring within the lines and following the rules. And that's not so good when a government agency controls your ability to launch new products. In other words, following the rules is kind of important.

Yesterday, the media reported that Pfizer had received a warning letter from the Food and Drug Administration for not reporting adverse events in a timely manner.

After doctors report adverse events to the manufactures of the drugs patients are on, the FDA requires companies to pass along those reports to the agency within 15 days. According to media reports, the agency says Pfizer turned in adverse-event reports late about 13% of the time between March 2006 and July 2009 and even failed to turn in some reports all together.

There's no reason to think Pfizer's drugs are less safe than before. This seems to be more an issue with failing to follow directions than it is a giant conspiracy to cover up side effects. Shareholders seem to have shrugged off the reports, sending Pfizer higher with the rest of the market today.

Pfizer will eventually resolve this issue just like Boston Scientific (NYSE: BSX  ) resolved its FDA paperwork snafu, and Johnson & Johnson (NYSE: JNJ  ) will work through its manufacturing issues. It may cost a few dollars to hire new workers, but it shouldn't be that hard to figure out a way to get the reports out the door in a timely manner.

But investors need to watch the situation carefully to ensure it's not an epidemic; this has been going on for a while, after all. Stepping on the agency's toes a little too much can result in a consent decree, costing the company time and money, as Genzyme (Nasdaq: GENZ  ) has found out. Even if it doesn't go that far, the FDA may feel the need to exert stronger scrutiny over all the company's paperwork including New Drug Applications, the lifeblood of revenue growth.

C'mon, Pfizer. Get your act together and stop worrying your investors with stupid mistakes like this. We've got enough to worry about with getting drugs approved.

Jordan DiPietro explains how breaking rules can lead to killer returns.

Pfizer is a recommendation of the Inside Value newsletter. The Inside Value team scours high and low to bring you the best value stocks available. Check it out for free with a 30-day trial

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is an Income Investor selection and Motley Fool Options recommended buying calls on the stock. The Fool has a disclosure policy.


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