FDA caution seen with Schering drug denial

By Lisa Richwine - Analysis

WASHINGTON (Reuters) - The unusual rejection of an experimental drug that had unanimous support from outside experts signals further caution by the U.S. Food and Drug Administration and increased uncertainty for investors.

The FDA's surprising refusal on Friday to approve Schering-Plough Corp's SGP.N Bridion, for reversing the effects of anesthesia, is the latest negative decision that has jolted Wall Street.

Schering-Plough -- shares of which fell as much as 8.6 percent after the company announced the FDA's rejection -- said the agency cited safety concerns in its decision. Meanwhile, European officials approved the drug earlier this week.

Bridion's rejection is "just the latest example of the agency's inexplicable behavior," said analyst Ira Loss of Washington Analysis.

"A legitimate question can be posed to FDA management: Is the fear of future congressional or press oversight so great that there is no one with the courage to approve a product that was unanimously endorsed by an advisory committee and approved in Europe earlier this week?" Loss said.

The FDA has been stung by criticism for its handling of serious side effects from Merck & Co's (MRK.N) arthritis pill Vioxx, pulled from the market in 2004, plus controversies surrounding antidepressants and other widely used drugs.

Consumer groups and lawmakers have pushed the FDA to look more closely at potential side effects to better protect the public from medicines that are too risky.

Drug company executives complain, however, that attacks from critics have made the FDA too nervous to approve drugs with acceptable side effects.