It's not just the FDA that affects which drugs doctors prescribe. There are other government agencies that make recommendations to those on the front line, and investors should pay attention to them, too.
Federal health experts released new guidelines this week regarding the treatment of asthma patients. The new National Heart, Lung, and Blood Institute report, which replaces 10-year-old recommendations, instructs doctors on how to treat and diagnose asthma and could have a real effect on the drugs that doctors prescribe for adults and children.
Inhaled corticosteroid drugs remain the best long-term treatment to control asthma in all age groups. The drugs are safe enough for everyone to use -- infants, children, even pregnant women and older adults are all OK'd to use the class of drugs.
That's solid news for the makers of inhaled corticosteroids including GlaxoSmithKline's
The panel recommended that any patient experiencing asthma symptoms more than twice a week be put on the long-term medication. The report also encouraged doctors to remind patients that they should continue to take their medication even when the symptoms diminish. That should help sell a few more inhalers during the summer months, when many patients report diminished symptoms.
The report also stresses that it's not just flare-ups that doctors should be worried about, but that patients should have their asthma under control to the point that they don't have to give up activities like exercising.
That is kind of the theme of the report: that asthma should be treated as a chronic illness for the estimated 22 million Americans who have the disease. That's good news for drug companies, since drugs that treat chronic diseases have a much better chance of reaching blockbuster status than those that treat acute problems.
Kids aren't adults
The new guidelines add a third age group that has different treatment recommendations. Previously, children younger than 4 years old were treated the same way as adults. The new guidelines have three groups, with children 5 to 11 treated differently from those younger than 5 or older than 12.
The guidelines suggest that long-acting beta 2-adrenergic agonists -- such as Glaxo's Servent and Foradil, marketed in the U.S. by Schering-Plough -- may not be required for kids under the age of 12. That restriction would also affect drugs that combine the long-acting beta agonists with an inhaled corticosteroid such as AstraZeneca's Symbicort or GlaxoSmithKline's Advair.
The use of beta agonists in adults could also decline because of the study. The panel recommended that doctors consider increasing the dosage of the inhaled corticosteroid rather than adding a beta agonist in adults whose asthma isn't being controlled by the lower dose of steroids.
Use of the add-on drugs could also be affected by the recommendation that doctors make sure that their patients -- especially children -- know how to use their inhalers. Apparently, there's a large portion of patients who use their inhalers incorrectly and thus reduce the amount of drug they're receiving. Thus, full doses from correct usage might alleviate symptoms that would otherwise have caused the patient to be put on an increased regime of drugs.
The experts also aren't sure that leukotriene receptor antagonists such as Merck's
New, but only for severe cases
The report includes guidelines for the use of Genentech's
Xolair is a new addition to the guidelines, since it hadn't been approved when the report was last put out. While it's not considered a first-line treatment, Xolair's inclusion in the treatment steps should help sales. Getting added to a list produced by a government agency is probably worth more than any pamphlet that a sales rep could give a doctor.
Government affects your portfolio
The FDA isn't the only organization that affects how well drugs do in the marketplace. Other well-respected government agencies can have just as much impact on doctors' views of drugs, which ultimately affects sales and the price of the companies' stock. In this case, makers of inhaled corticosteroids are the clear winners.
It's not just agencies that can make investors gasp for air. Regulations by Congress can also positively or negatively affect drug makers. While I'm sure a lot of investors, myself included, would like to leave the political debates to others, to invest wisely you have to stand somewhere near Philadelphia -- with one ear toward Wall Street and the other toward Washington, D.C.
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