WASHINGTON (AP) -- Regulators ended last week and started this one by rejecting two potential blockbuster cholesterol drugs, leaving three drugmakers reeling and Wall Street wondering if tougher approval standards are here.
Merck surprised investors late Monday when it said the Food and Drug Administration did not approve its cholesterol pill Cordaptive. The company was counting on the approval to help replace flagging sales of its older cholesterol drugs, Vytorin and Zocor.
The agency dealt a similar blow to Genzyme Corp. and Isis Pharmaceuticals on Friday, saying the companies must conduct additional studies of their cholesterol drug, mipomersen, that will delay its launch for several years.
There was no delaying the impact on Wall Street. On Tuesday, shares of Merck & Co. Inc. fell 9 percent while Isis fell 4 percent in afternoon trading. And analysts saw the FDA's back-to-back refusals as a potential signal of a more worrisome trend: tougher approval standards for cholesterol medications. The already-crowded market for the pills was the largest in the U.S. last year, with total sales of $18.4 billion, according to IMS Health.
WBB Securities analyst Steve Brozak said FDA has increasingly rejected drugs that don't offer a clear advantage over older medications.
"The party for all these 'me-too' drugs has been over for at least two years," Brozak said. "It's just that these pharmaceutical companies are only now beginning to realize it."
FDA demanded more data from drugmaker Wyeth four times before approving its antidepressant Pristiq, a follow-up to an older drug Effexor. And last year, regulators flatly rejected potential blockbusters to treat obesity and arthritis from Sanofi-Aventis and Merck.
FDA's unexpected rejections come amid a debate over the benefits of newer cholesterol drugs, triggered by a failed study of Merck and Schering Plough's blockbuster Vytorin. The drug, which had 2007 sales of $5 billion, combines Merck's older, cholesterol-lowering drug Zocor with Schering's Zetia.
Results released by the companies in January showed that while the combination did lower cholesterol levels, it was no better at reducing fatty plaque than Zocor alone, which is now available as a low-cost generic. Experts called on doctors to return to the older, more established class of cholesterol-lowering drugs known as statins, which includes Zocor and Pfizer's Lipitor.
And lawmakers questioned whether FDA's "lower is better" criterion for approving cholesterol drugs should be re-examined. FDA has long approved drugs based on their ability to lower so-called bad cholesterol, which is widely believed to reduce heart attack and death.
But the Vytorin results suggest the connection between higher cholesterol and negative outcomes may not be as concrete as initially thought.
While agency staff have said they are not changing the standards for approving cholesterol drugs, analysts say their actions suggest a shift.
Genzyme and Isis on Friday said FDA would not grant their drug broad approval based solely on lower cholesterol levels. Instead the companies said they will have to conduct a large-scale study tracking whether patients actually live longer or have fewer heart problems while taking their drug.
Cowen and Co. analyst Eric Schmidt said that while FDA officially hasn't revised its guidelines, "changes appear to be happening behind the scenes before they're announced in the open."
Schmidt downgraded shares of Isis to "Neutral" from "Outperform," saying the additional study requirement would hurt the company's outlook in the near-term.
"The good news is we'll get a good idea of whether these newer cholesterol drugs actually improve outcomes for patients," Schmidt said. "The bad news is it will take longer for patients to get access to them."