Wyeth's Biting the Hand That Feeds It

I've seen a lot of risky moves in drug development, but suing the agency that approves drugs for marketing might take the cake.

Wyeth (NYSE:WYE) decided to sue the Food and Drug Administration after it approved Orchid Chemicals & Pharmaceuticals' generic version of its antibiotic Zosyn. It's suing the FDA, and not Orchid, because this isn't a case of patent infringement, but of Orchid apparently marketing a different version of the drug.

According to the company, unlike Wyeth's version, Orchid's drug is a copycat of an older version that Wyeth used to sell, and that should not be mixed with IV solution. Wyeth is worried that health-care providers won't notice the difference, jeopardizing patients' lives. The company filed a citizen's petition with the FDA, but the agency turned it down and approved Orchid's version last week.

By suing, Wyeth is basically saying that the agency's safety reasoning isn't sound, which doesn't sound like a good argument to make even if it can get a court to agree. Teva Pharmaceuticals (NASDAQ:TEVA) sued the FDA last year over its generic version of Johnson & Johnson's (NYSE:JNJ) Risperdal, but the company wasn't questioning the agency's ability to keep patients safe. Instead the argument was over an interpretation of the agency's rules: Teva was trying to keep competitors Mylan (NYSE:MYL) and Par Pharmaceutical (NYSE:PRX) off the market because Teva felt it was the first one to challenge a patent.

This isn't the first time that the FDA's level of safety has potentially cost Wyeth money. The drugmaker lost a Supreme Court case earlier this year in which one of Wyeth's drugs was injected incorrectly. The FDA-mandated label indicated the correct way to inject the drug, but the plaintiff claimed, and the court agreed, that the warning should have been stronger.

While the move is risky, it's still probably a good one by Wyeth. There's over $1 billion in annual sales at stake, and besides, Wyeth is in the unique position of not being around in a couple of months for the FDA to hold a grudge against. Whether the suit will hurt its acquirer, Pfizer (NYSE:PFE), remains to be seen, however.

These pros aren't scared of health-care reform. Are you?