Here's a rather astounding fact: According to a review recently published in the Journal of the National Cancer Institute, the Food and Drug Administration approved 53 of the 60 cancer drugs that were submitted for review from mid-2005 through 2007.

That's an insane 88% approval rate.

Before you load up on cancer-drug makers ...
Realize that's not the same as saying the FDA approved 88% of drugs developed to treat cancer. We're only looking at drugs that were submitted to the FDA; for every drug that's submitted, there are many that died in clinical trials.

Also, the review included drugs submitted for approval to be used in additional cancer types, which had a perfect 100% approval rate. While that kind of expansion can happen in other indications -- Pfizer's (NYSE:PFE) Lyrica is approved for a couple of pain conditions as well as seizures -- I would guess it's more common for cancer drugs. Most -- 35 of the 53 cancer approvals -- were for expanded indications, including sanofi-aventis' (NYSE:SNY) Taxotere, Johnson & Johnson's (NYSE:JNJ) Doxil, and Novartis' (NYSE:NVS) Gleevec.

With a drug already in use, the FDA is likely more comfortable with the drug's side-effect profile. Because manufacturing was covered in the first approval, an expanded approval also has less risk of regulators coming up with manufacturing issues, although it's not completely removed if the drug is made in multiple places. Last year, for instance, Bristol-Myers Squibb (NYSE:BMY) and Eli Lilly (NYSE:LLY) pulled back their FDA application to expand Erbitux into lung cancer because the drug used in the clinical trials didn't come from the plant that supplies the U.S.

What it does mean ...
Drug companies are pretty good at figuring out what drugs are up to snuff. Sure, there were two that were withdrawn and five more that got flat-out rejections, but by and large, cancer-drug companies seem to be able to satisfy the FDA.

Buy why?
The short answer is that cancer is deadly. When there aren't many other treatment options, the FDA will be more lenient there than for a drug that doesn't have an immediate need to save lives. For instance, nine of the approvals were of the accelerated variety, which allows a drug company to market the drug, but requires the company to conduct clinical trials to confirm the initial finding. Also, the FDA generally requires two phase 3 trials before it'll approve a drug, but 44 of the 53 approvals were based on a single phase 3 clinical trial.

Part of the reason companies are able to correctly predict how the FDA will decide may be because drug companies often enter Special Protocol Assessments (SPAs) with the FDA. With an SPA, the FDA is essentially signing off on the clinical trial design, including the endpoints that are used to measure the success of the trial. If the drug hits its SPA-defined goals and nothing else pops up -- like a side effect -- an approval is extremely likely. That's one of the reasons that investors have such high hopes that Dendreon's (NASDAQ:DNDN) Provenge, for prostate cancer, will get past the FDA this time.

Careful what you wish for
Keep in mind that the reduced risk of no approval means investors will drive up the price before the FDA decision. With drugs that seem likely to get an approval, you can't expect as large a pop on FDA approval as you would get with a company like Vanda Pharmaceuticals last May, when everyone thought another rejection was coming. In extreme cases, like Onyx Pharmaceuticals' Nexavar, you might even see selling on the news because the approval was fully priced into the stock.

As an investor, you can lower your risk by investing in cancer drug companies after a clinical trial success but before an FDA approval, but you'll also reduce your reward.

Pfizer is a Motley Fool Inside Value selection and Novartis is a Global Gains recommendation. Johnson & Johnson is an Income Investor pick, and Motley Fool Options has recommended buying calls on the stock. Try any of our Foolish newsletters today, free for 30 days

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