FDA Proposal to Publish Drug-Rejection Letters Is Good for Pharma, Even if Pharma Doesn't Agree

(MoneyWatch)  The FDA's recent proposal to reveal the secret letters it sends to drug companies when rejecting their products could be good for everyone -- even the drug companies who are likely to fight the agency every step of the way.

The way the system works now, the FDA doesn't disclose when a drug company has applied for approval, or if the application gets denied, withdrawn or abandoned. It's also totally up to the drug maker to reveal if the agency issues a "complete response" letter -- a letter essentially explaining why the agency won't approve the drug and what needs to be done to get it approved. Since the rationale could be anything from a mistake in the page numbers on the application to a request for an additional 10,000-patient clinical trial, you can see where companies might be tempted to spin or selectively disclose information.

Investors have long fought to make complete response letters public for exactly that reason -- if the FDA won't approve a drug, they want to hear why straight from the horse's mouth. Analyst Avik Roy explains here how a biotech can hypothetically game the system and hide behind secret FDA letters to fleece investors.

But consumer groups, too, want to see complete response letters made public, particularly when a letter might reveal a safety concern with a drug that could also affect patients participating in clinical trials of a similar, competing drug.

Even drug companies could benefit from disclosure of complete response letters, even though they fight it every time it comes up for discussion. The FDA said industry feedback on its proposal has raised concerns about disclosure of confidential information and giving competitors an unfair advantage.

But companies always seem to be "shocked and disappointed" when they get a complete response letter, and they always complain that the FDA review process is a black box and they got smacked with some concern they didn't see coming. If complete response letters were made public, and everyone could learn from the FDA's feedback, management might be able to better anticipate what issues the FDA will raise and avoid wasting money on the same mistakes another company has already made.

Transparency is a two-way street: If the industry wants more transparency from the FDA, it has to let the FDA be more transparent.

Secret photo by Flickr user [puamelia], CC.