Healthy Skepticism Library item: 15937

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Fernando V.
FDA Helps Investors Look Past Box Warnings
Seeking Alpha 2009 Jul 2
http://seekingalpha.com/article/146651-fda-helps-investors-look-past-box-warnings

Full text:

Black Box warnings are the most severe type of warning that the FDA can require for a pharmaceutical. They can indicate a wide range of potential risks, with varying degrees of probability, but one thing is for sure. The term Black Box is downright scary and it frequently highlights a serious, though perhaps very improbable, health risk such as, well, death.

Still, to be fair, it could be simply telling me about a suicide risk that has 1/100th the probability of me similarly dying when I get behind the wheel of a car. And given the dark name, I’m far less inclined to risk the Black Box warning than to drive to the corner store. So perhaps this is a problem, that the term Black Box is too scary even if it does warn of some pretty unfortunate risks.

It appears the FDA has recognized this since they are beginning to phase-out the term with some better word choice. Is it fair if we call this a re-branding of the Black Box?

On the FDA conference call with reporters this afternoon to discuss the new warnings, two agency officials told the news media to use the phrase “Boxed warning” instead of “Black box warning.” Why? As one of them put it, “Black box carries the implication, ‘Don’t you dare use this’.” The other official added, “We don’t want to scare people off (from trying to quit smoking). We just want them to be carefully monitored.”

I think it makes a lot of sense even if I had never quite thought about the issue previously. Hopefully a change of name will help remove some unnecessary fear from consumers who otherwise could be receiving the benefits of good medication. Because as I highlighted above, it’s not just the potential outcome, but also the probability that matters, and how that stands relative to all the other things we do in life which have risk. So kudos FDA.

At the same time, here at Research Reloaded we hope it helps investors react with less panic to Black Box (Now “Boxed”) warning surprises (or even potential ones) for drugs owned by their companies, such as we’ve seen with Sanofi Aventis’ (SNY) insulin products most recently or with anti-smoking drugs from Pfizer (PFE) and Glaxo (GSK). I’ll just throw in that Carl Icahn should be happy too, given that one of his activist targets Amylin (AMLN), a special situation stock I have highlighted on Research Reloaded frequently, faces investor concern that its key drug Byetta could require a Black Box/Boxed warning.

The FDA’s previous bad choice of wording with Black Box, and current move to correct it, shows that inefficiencies are everywhere. Now consumers and investors can focus more on the substance of the warnings rather than simply stop dead, no pun intended, upon hearing the term.

Disclosure: The author owns shares of Amylin and Sanofi-Aventis.