A federal judge's decision in Texas to outlaw a decades-old abortion drug undermines the foundation of all biotech stocks, warns a group of nearly 600 health care executives and experts.
Chiefs of big medical names like Pfizer, Biogen and Incyte are uniting to oppose the decision by U.S. District Court Judge Matthew Kacsmaryk in Amarillo, Texas, to place on hold the Food and Drug Administration approval of mifepristone and misoprostol. The drugs comprise a two-step regimen to end a pregnancy.
Industry executives say the ruling complicates access to medical abortion nationwide. It also has a potential chilling effect on innovation in women's health, they add. Finally, it undermines the authority of the FDA to approve and reject drugs in the U.S., executives say.
This "judicial activism" could have far-reaching implications beyond abortion, said Dr. Jeremy Levin, chief executive of Ovid Therapeutics. Levin is one of several executives behind the letter.
"The assault — which it is — on the primacy of the FDA was going to damage us," Levin told Investor's Business Daily, referring to reasons for the letter. He added there is a "real concern that this was affecting everybody in the industry and would have a profound impact on medicines in America."
Biotech Stocks: A New Battle Unfolds
The battle pits FDA-approved drugs against anti-abortion activists and will likely play out at the U.S. Supreme Court, says Levin. Complicating matters, another federal judge in Washington issued an opposing ruling within minutes of Kacsmaryk's decision. The judge's counter-ruling upholds the FDA's approval of the two-drug regimen in 17 states and Washington, D.C.
On Friday, the Supreme Court temporarily halted the lower court's rulings that would have restricted mifepristone access nationwide as soon as Saturday. The temporary stay is in place until midday Wednesday.
Meanwhile, Levin and the other letter-signers are more concerned about the precedent Kacsmaryk's order sets for the FDA. Based on the 67-page ruling, Kacsmaryk didn't base his reasoning on the safety and effectiveness of mifepristone and misoprostol, Levin said.
The drug gained approval in 2000 based on seven studies of 40,000 women. It has been on the market now for more than two decades. But the plaintiffs in the complaint, a group called the Alliance for Hippocratic Medicine, say the FDA didn't follow proper procedures when it approved mifepristone and misoprostol.
"Whatever the reasoning behind (Kacsmaryk's ruling), the logic was emphatically not scientific," Levin said.
Why Investors In Biotech Stocks Should Worry
And that's what should spook investors in biotech stocks, says Dr. Shehnaaz Suliman, the original letter writer. Suliman is chief executive of privately held ReCode Therapeutics, a maker of genetic medications. She calls the FDA the global "gold standard" for evaluating drugs based on their scientific merits.
"As innovators, we rely on an intact and functioning FDA to make evidence-based decisions on the approvals of new medicines," she told IBD. "But more importantly, as physicians, as practitioners, we know the American people rely on medicines developed by our industry to keep them healthy and safe, and they rely on the FDA as the decision-maker about which of these are safe and effective."
She added: "We need to safeguard this trust."
Mifepristone, for example, sells under the brand name Mifeprex from privately held Danco Laboratories. For its part, the FDA says it approved the drug based "on a comprehensive review of the scientific evidence available."
Further, the approval was done in accordance with the law, the FDA said in a written statement.
Are Other Approved Drugs Next?
Meanwhile, biotech stocks are already under pressure this year.
The Centers for Medicare and Medicaid Services plans to begin negotiating prices for the 10 most expensive Part D drugs. Further, biotech stocks skidded amid the banking crisis. Now, the abortion ruling in Texas offers another chilling possibility, Levin says. What if all already-approved drugs become the target of political ideologies?
Take the measles, mumps and rubella vaccines.
"If somebody decides that an approved vaccine is a problem because they believe that it causes autism — falsely, based on what was published in the Lancet (medical journal) 30 years ago — they can challenge it in a court and may result in the overturning of an approved, safe drug which is saving lives," said Levin.
Contraceptives, rare disease treatments and medicines for the elderly could become targets of politically driven litigation, he said.
"What this has created is a potential second channel for approval or disapproval of drugs outside of that mandated by Congress, in the court of law where there are no experts to opine on the medicine's value as a medicine or the safety," he said.
Though biotech stocks haven't skidded on the ruling, the entire industry is at risk, he says.
"You have upended completely the process of drug approvals in the United States, and that means that our entire industry is at risk and millions, millions of Americans are at risk," he said. "We're not talking about one drug, we're talking about vaccines, we're talking about drugs for Alzheimer's, you can keep on going down the road. All you have to have is some political intent to overturn the approval of a drug."
A Chilling Effect On Women's Health
The Texas ruling also has a chilling effect on innovation in the already lowly innovated women's health space, says Dr. Jessica Shepherd, an OB-GYN based in Dallas, and chief medical officer of Verywell Health, a health care-focused publication.
She sees an odd duality in women's health today. Numerous "femtech" companies have launched to take on challenges in women's health care. But litigation and legislation are working to undermine women's access to care.
Shepherd also said the Texas order doesn't appear to be based on an examination of the safety and effectiveness of mifepristone and misoprostol. That undermining of the FDA also threatens biotech stocks.
"When you look at how long the drug has been on the market and used, you can see the scientific evidence stacks up against the ruling," she told IBD. "This is undermining another entity where their sole purpose is to determine what's safe and effective for the indicated use."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
