A report by the country’s leading scientists is leading to fears by drug industry analysts that it may prompt legislation that could in turn impact the bottom line for drug companies. The Baltimore Sun called the report “scathing,” and it has again raised questions about why drug safety reform has yet to move forward in Congress.

The Institute of Medicine (IOM) released a long-awaited report on drug safety at the Food and Drug Administration. The report’s recommendations include:

– Labeling requirements and advertising limits for new medications
– Clarified authority and additional enforcement tools for the agency
– Clarification of FDA’s role in gathering and communicating additional information on marketed products’ risks and benefits
– Mandatory registration of clinical trial results to facilitate public access to drug safety information
– An increased role for FDA’s drug safety staff
– A large boost in funding and staffing for the agency

Some viewed FDA’s request for the IOM report as a way to delay action by Congress or the FDA following drug safety disasters like Vioxx–a drug taken by millions but linked to cardiovascular problems, and some antidepressants — which were linked to an increased risk of suicidal thoughts for some.

Indeed, it’s been two years since Vioxx was pulled from the market. Fortunately for the public, the time it took for a thorough IOM report did not have the effect of undermining reform efforts. Sen. Chuck Grassley, an early proponent of drug safety reform, used the opportunity of the IOM report to reiterate drug safety problems in a letter to the FDA. Sen. Chris Dodd, Grassley’s partner on two key drug safety bills, used the opportunity to urge public hearings on the HELP committee’s drug reform legislation, S. 3807, in a letter from committee democrats.

Everyone, it seems, is realizing that reforming and enhancing safety oversight of the drug industry is something that must happen. But not everyone thinks it’s a good idea. A story in FDA News Daily Bulletin says the IOM report, “could do long-term damage to the industry bottom line and will likely spur legislation in the next Congress.”

An increase in FDA safety oversight “could both raise the R&D costs and hurdles for bringing new drugs to market and raise the costs for postmarketing… monitoring,” Risinger wrote. Restrictions on DTC advertising and the requirement that new drugs be labeled with a special symbol “could limit initial sales growth potential and thus the return on investment prior to patent expiration.”

I’m no drug industry analyst, but has anyone factored in the financial cost of dismantling public confidence in prescription drug companies?

Actually, not everyone agrees with the gloom assessment by financial analysts of the release of the IOM report. Not because such changes may shore up public trust in drug companies, instead:

Because the report’s recommendations are “ideas for change, not the change itself,” it is too early to gauge the impact on industry, Harry Sweeney, the CEO of Dorland Global Health Communications, said. Peter Pitts, director of the Center for Medicine in the Public Interest (CMPI) and a former FDA associate commissioner for external relations, was also skeptical. “I don’t see the relevance in a report that makes observations based on 100 percent of the report being adopted.”

Maybe drug companies — and the financial analysts who track them — should embrace the call for reform from the nation’s leading scientists as a way to get back some of the public trust the industry has lost over recent years, instead of the industry using its considerable lobbying clout to stymie reform.