The Food and Drug Administration can influence how well a drug sells by determining the warning labels that must accompany the drug. Unfortunately for drugmakers, the ability to slap a warning label on a drug isn't limited to when the drug is approved. Labels are constantly updated as new safety information becomes available.
Fortunately for drugmakers, it's also possible to get a warning label removed.
Good: Better late than never
Earlier this month, the FDA removed the warning label on Gilead Sciences'
When the drug was approved in 2007, there was hope it wouldn't carry the warning telling doctors and patients about potential liver problems like its competitor Tracleer, from Actelion. But the FDA slapped the drug with a warning label.
Now that there's more experience with the drug, the FDA has removed the warning and a requirement that patients receive monthly liver function tests. Theoretically that gives the drug an advantage over Tracleer, but we'll have to see whether doctors are willing to accept the FDA's about-face.
Bad: A generic who cares
The FDA increased its scrutiny of Johnson & Johnson's
The agency didn't issue an all-out ban on pregnant women taking the drug, but the heightened safety issue may cause many pregnant women to stop taking the medication, especially since there are other options available.
Johnson & Johnson could care less. The drug went off patent in 2009. Teva Pharmaceutical
Ugly: The innocent bystander
The big loser in the Topamax change was VIVUS
Considering how hard the agency has been on other obesity drugs -- Arena Pharmaceuticals'
Prior to the added warning, the FDA requested that VIVUS try to figure out the relative risk for expectant mothers taking Qnexa.
Just because the FDA kept Topamax on the market, investors shouldn't assume that it means the active ingredient can be approved as a treatment for obesity. The level of cleft lip that's an acceptable risk for epileptics taking the medicine is surely higher than it is for obesity, where diet and exercise work reasonably well with limited side effects -- sore muscles and growling stomachs notwithstanding.
Keep your eyes open
Once a drug is approved, investors can't fall asleep and ignore FDA announcements about drugs. They come in different varieties, but warnings tend to be of the bad and ugly variety more often than the good.
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. The Fool owns shares of Johnson & Johnson, and Teva. Motley Fool Alpha LLC owns shares of 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.