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Taking the F Out of FDA

By Brian Orelli, PhD – Updated Apr 6, 2017 at 1:35AM

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Would that result in a D or an A grade?

President Barack Obama's got people talking with his nomination for deputy commissioner of the Food and Drug Administration.

Yep, deputy.

The new FDA commissioner's deputy, Joshua Sharfstein, is a pretty well-respected guy. With two capable people at the helm, that's got people talking about the possibility of splitting the food safety portion away from the drug portion of the agency. Taking the F out of the FDA would certainly be advantageous for investors in drug and medical device companies -- who needs a chief distracted by tainted peanut butter -- but the big question is whether we'll be left with a DA that's deserving of a D or an A grade.

As an investor, the FDA currently gets a failing grade in my book. Sure it's not completely the agency's fault. In the wake of post-approval safety issues with Merck's (NYSE:MRK) Vioxx, Pfizer's (NYSE:PFE) Bextra, and GlaxoSmithKline's (NYSE:GSK) Avandia, the FDA was given more drug-safety responsibilities without an apparently equally sized bump in budget. That seems to have hurt the agency's ability to get decisions about marketing applications out in a timely manner.

I've lost track of the number of drugmakers that have been subject to agency delays. From giant Johnson & Johnson (NYSE:JNJ) to much smaller Theravance (NASDAQ:THRX), PDUFA dates seem meaningless at this point; Eli Lilly (NYSE:LLY), for instance, had its PDUFA date for prasugrel bumped from June to September of last year and the company is still waiting to hear whether the drug will get a green light.

Removing the food section from the drug section would eliminate one distraction, but the safety issues aren't going to go away anytime soon. It might raise the agency up to a D grade, but until the government throws some serious cash at the agency, it seems unlikely that the speed of approvals is going to pick up anytime soon.

More Foolish commentary:

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is an Inside Value pick. The Fool has a disclosure policy.

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Stocks Mentioned

Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$86.78 (-0.83%) $0.73
Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$311.46 (0.19%) $0.59
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$166.72 (0.33%) $0.54
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$44.08 (-1.10%) $0.49
GSK Stock Quote
GSK
GSK
$29.36 (-2.17%) $0.65

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