Shares of GlaxoSmithKline (NYSE:GSK) dropped nearly 8% on Monday, after a study published in the New England Journal of Medicine (NEJM) raised safety concerns about the company's widely used diabetes drug, Avandia.

Kathy Wolski and Dr. Steven Nissen, a prominent researcher and chairman of cardiovascular medicine at the Cleveland Clinic, reported a 64% increased risk of heart-related death and a 43% increased risk of having a heart attack among patients taking Avandia. Their conclusion came from data from 42 previously conducted clinical trials, involving close to 28,000 patients.

Investors should note that Wolski and Nissen's meta-analysis, reviewing data from other studies after the fact, differs from the experimental trial data which highlighted safety risks in Merck's (NYSE:MRK) Vioxx and prompted its recall from the market.

In its first-quarter financial results, Glaxo reported worldwide pharmaceutical sales of $9.4 billion. The Avandia group of products accounted for roughly 8.6% of global prescription drug sales, topping $800 million for the quarter. Avandia is the second-best seller in Glaxo's portfolio, making any trouble here a very big deal.

That said, the market appears to be getting ahead of itself, sending Glaxo down almost 8% on Monday. That drop discounts nearly all of the existing Avandia sales from the company's valuation.

The FDA has stated that it will take the issue of Avandia's safety to a public advisory committee for further debate. In the meantime, the agency issued a safety alert urging patients to talk to their doctor about the new data on Avandia, especially if they carry a high risk of heart disease. Glaxo issued a statement affirming the benefits of Avandia when prescribed appropriately. Shares of Merck ended the day to the upside by about 1%. The stock had reached new multiyear highs earlier in the day, on optimism about increased sales of its new diabetes drug, Januvia, which stands to benefit from any Avandia-related concerns.

In my opinion, the market reaction today seems overdone, given the limitations cited by the authors in their NEJM meta-analysis. Notably, their results were based on a relatively small number of heart-related, since the studies they reviewed covered fairly brief periods of time. In addition, the authors did not have access to the source data from these studies, instead relying on results from public sources. However, the NEJM's conclusion is valid: Future clinical trial data, including the ongoing RECORD trial, is needed to better determine Avandia's safety.

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Fool contributor Mike Havrilla, R.Ph., B.S., Pharm.D., is a Rite Aid pharmacist who lives, writes, works, and enjoys running on the streets and trails of Portage, Penn. He invites your comments and feedback. Mike does not have a position in any company mentioned in this article. The Fool has a disclosure policy.