While you, I, and the rest of the world were watching to see whether Paris Hilton was in jail, out of jail, back in her posh home, or back in her not-so-nice cell last week, a very interesting story was unfolding -- a story particularly important for millions of Americans with diabetes mellitus.

On May 21, the New England Journal of Medicine (NEJM) published an article by Dr. Steven Nissen and Kathy Wolski with an accompanying editorial raising concerns about the safety of diabetes medication Avandia (rosiglitazone). Nissen is a former president of the American College of Cardiology and the chairman of cardiovascular medicine at the Cleveland Clinic. When he questions a drug's safety, lots of people listen; some of them work at the Food and Drug Administration or serve in Congress.

Avandia is manufactured by GlaxoSmithKline (NYSE:GSK) and is a best-selling drug used to treat diabetes. GlaxoSmithKline also makes combination drugs Avandamet (Avandia and metformin (Glucophage)) and Avandaryl (Avandia and glimerpiride (Amaryl)). Approved by the FDA in 1999, Avandia is GSK's second-best-selling drug, and its sales are rising. GSK's 2006 annual report lists sales of the Avandia group of products as 1.64 billion pounds, up 25% from 2005.

Nissen performed a meta-analysis reviewing 42 trials in the public domain in which 15,560 patients were randomly assigned to regimens with Avandia, and 12,282 were assigned to regimens that did not contain Avandia. He found that, cumulatively, patients assigned to Avandia had a 43% greater chance of having a heart attack. He stated that the study had many limitations. It looked retrospectively at studies not designed to test for an increased risk of heart attacks, and he had no access to source (individual patient) data.

Drs. Bruce Psaty's and Dr. Curt Furberg's accompanying editorial called for regulatory action by the FDA, pointing out that Nissen's study shows the lack of effectiveness of the FDA system for monitoring safety.

GlaxoSmithKline defended Avandia as being safe. To provide clinical data supporting its safety, an unplanned interim analysis of the ongoing RECORD Study (The Rosiglitazone Evaluated for Cardiac Outcomes and Regulation of Glycaemia in Diabetes) was performed and published online by the NEJM on June 5, 2007. Accompanying editorials were simultaneously published.

The RECORD Study randomized 4,447 diabetic patients with poor blood sugar control, while taking either metformin or sulfonylurea (two older, commonly prescribed diabetes drugs). Half of the patients received treatment with Avandia in addition to the drug they were already taking and the other half received treatment with both metformin and sulfonylurea. The published interim results after a mean follow-up of 3.75 years (of a planned six-year duration) were inconclusive. There were no statistically significant differences between the Avandia group and the control group regarding heart attacks or death from cardiovascular cause or any cause. Over twice as many patients taking Avandia developed congestive heart failure, a known risk.

Editorialists raised concerns over the study. Dr. David Nathan, director of the Diabetes Center at Massachusetts General Hospital and professor of medicine at Harvard Medical School, went as far as to suggest that physicians should stop prescribing Avandia. He wrote that the higher-than-expected rate of patient drop-out from the study, along with the lower-than-expected rate of heart attacks, makes it unlikely that the study will subsequently be able to answer whether patients taking Avandia are at increased risk of developing heart attacks. He questioned using metformin and sulfonylurea in the control group, since that drug combination used in diabetic patients was found to have an increased risk of death in an earlier study.

Psaty's and Furberg's editorial about the RECORD Study pointed out that in August 2006, GSK provided the FDA and the European Medicines Agency with a meta-analysis that showed that Avandia was associated with a 31% increased risk of myocardial ischemic events. The European Medicines Agency changed the labeling to reflect this information in October 2006, but as of the publication of Nissen's article, the FDA had not changed the labeling, concluding, "Rosiglitazone is also associated with significant weight gain, an adverse effect on low-density lipoprotein cholesterol, an increased risk of heart failure, an increased risk of fractures in women, and an apparent increase in the risk of myocardial infarction. Patients should not stop treatment on their own, but if they have concerns, they should consult their physicians. Together, patients and physicians can decide whether they wish to suspend the use of rosiglitazone."

Then, Congress got involved; on June 6, there was a House Oversight and Government Reform Committee Meeting concerning Avandia. In an unusual twist for a drug-safety hearing, Dr. John Buse, chief of endocrinology at the University of North Carolina and president-elect of the American Diabetes Association, stated that he was threatened by SmithKline Beecham (the company that subsequently combined with Glaxo Wellcome to form GSK) with a multibillion-dollar lawsuit after raising safety concerns about Avandia. FDA Commissioner Andrew C. von Eschenbach said the FDA would change the labeling and that there was a meeting, set for July 30, of outside experts to evaluate Avandia and similar drugs.

What should investors do?

The Avandia story is just beginning. Drug-safety issues weighed heavily on the share price of Merck (NYSE:MRK) when Vioxx was in the news. If you google "Avandia," paid links at the top and side of the screen take you to the lawyers' website. Sales of Avandia are falling, and the drug might be taken off the market in the future. The shares do not appear deeply discounted to me -- they sold for a similar price last November -- and I suspect that additional news is more likely to be bad than good.

Fool contributor Michael Cecil is a cardiologist and the author of Drugs for Less: The Complete Guide to Free and Discounted Prescription Drugs. If you would like to discuss the article, feel free to email him. Dr. Cecil owns no shares of companies mentioned in the article. Pfizer is an Inside Value recommendation. GlaxoSmithKline is an Income Investor selection. The Fool has a disclosure policy.