FDA new response procedure could confuse investors

WASHINGTON The Food and Drug Administration’s decision to change how it responds to drug companies’ submissions for drug applications is not only affecting the companies, but investors as well, according to Reuters.

The approach could cloud a drug review process already growing less predictable as global pharmaceutical companies find less success winning U.S. approval for new products. The policy “may not give as much visibility to the direction the FDA is going,” Morningstar analyst Damien Conover said.

In the past, an approvable letter told companies their applications could be cleared if certain conditions were met. A not-approvable letter was seen as a sign of more serious problems.

The complete response letters will spell out what drugmakers could do to win approval, the FDA said.

But the agency by law must keep the letters confidential. Investors must rely on the companies, which often disclose only the type of letter received and give little detail about the FDA’s complaints. Manufacturers typically do not release a letter’s actual text.

Based on those facts, investors will now be guided by the companies as to what happens to a drug that could be a potential blockbuster on the market.