The Bloomberg News home page is linking to an article from TheStreet.com about how shares in drug company Dendreon were up 10%, then down 6%, on reports of whether the Food and Drug Administration was going to have a meeting about Dendreon's prostate cancer drug, Provenge. This is something of an old story; as the overly conspiratorial and ad hominem but nonetheless interesting Web site deepcapture.com reports, Jim Cramer was discussing Dendreon as a "battleground stock" all the way back in 2005. But as a FutureOfCapitalism.com reader points out in an email, the Dendreon/Provenge situation points out some of the downside of having a single federal agency responsible for approving drugs.
What is the stock price moving in response to? The underlying therapuetic value of the drug? Or the prospect of a decision by a single powerful government regulator? If each of the 50 states had its own FDA, you might get more risk-taking, and some regulators might be better than others. For example, my reader, who says he has no stake in Dendreon, writes, "In many 'failed' drug tests there is a group of 'super-responders' but neither the FDA nor the pharmaceutical industry appears interested in identifying the group or ascertaining how that sub-group differs from the larger non-responding group; each for their own reasons." The pharmaceutical industry has valid economic reasons -- Why segment the marketplace for a drug?
The FDA? The reader writes: "No one will ever get in trouble for declining to ok a drug or method of treatment that might be beneficial to a specific subgroup, but if something is approved for the general population and then proves to be harmful to a specific subgroup, then all hell breaks loose."
On top of that, some -- including this pro-Provenge Web site -- allege that in deciding on Provenge the FDA was advised by doctors who had conflicts of interest.
Anyway, it's an interesting situation, not just because if the drug works it can save lives, but because in the swing in the price of Dendreon stock you can see the power of the government at work. It's the same company with the same science and the same product pipeline, but the market values it up 10% or down 6% depending on what the FDA is going to do.