The FDA Has the Final Say (and the One After That)

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According to the Wall Street Journal, Johnson & Johnson (NYSE: JNJ  ) is appealing the FDA's decision to reject Johnson & Johnson's medical device, Sedasys.

I wouldn't hold my breath hoping for a reversal.

There's no outside agency to appeal to. Companies that don't like the agency's decisions on medical devices or drug have to appeal back to the FDA. In Johnson & Johnson's case, the company is going all the way up to the commissioner, Margaret Hamburg.

The FDA's issue with Sedasys revolves around its safety, which makes it very unlikely that Hamburg would overturn the decision. The device is used to mildly sedate patients using the drug propofol, which is typically administered by an anesthesiologist. The FDA wants Johnson & Johnson to compare the use of Sedasys by doctors that are performing routine medical tests like colonoscopies to anesthesiologists administering propofol.

Sure, Hamburg could say her underlings were wrong, but wouldn't that just imply she was running an agency with unqualified reviewers? There's no incentive to overturn the decision and a lot of reason not to.

The same goes for MELA Sciences (Nasdaq: MELA  ) , which is awaiting a second decision from the agency on its melanoma detection device, MelaFind. The company asked the agency to take a second look, including polling a panel of outside experts, but I doubt it'll change the agency's mind.

Drug companies have the same appeals process -- Cell Therapeutics (Nasdaq: CTIC  ) is going through it right now -- but it's likely to have the same eventual outcome. In fact, I know of just one case, Gilead Sciences' (Nasdaq: GILD  ) Cayston, where the FDA actually reversed its decision.

Johnson & Johnson claims that the FDA changed the rules midstream -- welcome to the club -- but I doubt that's going to sway Hamburg. Opinions change, new reviewers pick up on something that others missed, a famous singer dies while on propofol. Whatever the reason for the rejection, the FDA has the final say.

Still, the appeal might not be completely in vain. It may be like a baseball manager yelling at the umpire; he's not trying to get this call overturned so much as hoping to get the next one to go his team's way.

Keep up on Johnson & Johnson as it tries to get Sedasys approved and deal with ongoing recalls. Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Johnson & Johnson.

Johnson & Johnson is a Motley Fool Inside Value recommendation. Gilead Sciences is a Motley Fool Stock Advisor pick. Johnson & Johnson is a Motley Fool Income Investor recommendation. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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

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