Merck & Co (NYSE: MRK) wanted its Mevacor cholesterol drug to transition from a prescription-only product to an over-the-counter (OTC) drug product to give more potential patients access to it. Nice work if you can get it ---- prop up sagging sales by rapidly increasing your audience. The only problem: the FDA did not see it that way, and the government entity rejected Merck's plan to move Mevacor to the shelves of your local retailer this week.

What will this do? Hurt Merck's results, for one. As pharmaceutical companies try to regroup worldwide in the face of a slumping and heavily scrutinized industry here in the U.S., the companies are looking for more acceptance in overseas markets as well as opening up new sales channels in the U.S. market. Taking a drug from prescription status to counter sales is one way to do that.

The FDA, though, thought that too many of the wrong kind of patient (someone who has no need for a cholesterol drug) would be buying Mevacor if it was so freely available. And hence, Merck's wishful thinking was rejected. In a study before making the decision, FDA advisers were surprised at how many people out of a pool of 1,500 potential customers wanted to buy the drug even though they were not candidates for such a product. But, this is only an initial stab: it appears likely that many drug giants will lobby the FDA for OTC sales of existing prescription products (even lower-dose versions) to grow future sales into a new audience. Is this the start of a new era for the pharmaceutical industry? Could be.

Merck & Co. (NYSE: MRK), like its pharmaceutical competitors, has seen better days. A raft of patent protection expirations, bad PR, concerns over health risks for many of its drugs, and a lack of pipeline products, have all combined to stomp on one of the largest pharmaceutical firms in the world. Is the future brighter? Possibly, but there's a lot of risk to go with it.

Merck says that it will continue to develop experimental drugs for cholesterol and obesity [subscription required]. Nothing new there, as those two health conditions are increasing in numbers in the U.S. (obesity in particular). But Merck will be developing new drugs in these areas where the competition has miserably failed in the recent past due to safety problems.

What can Merck do to ensure its efforts to not meet the same fate? That is a question without a clear answer, although stakeholders long in MRK shares should be asking that question right now. It doesn't have the best track record, with the Vioxx lawsuit mess and strong competition for one of its most popular blockbuster drugs, the Zocor cholesterol product.

Merck, embracing some recent science, believes that raising good cholesterol could reduce the risk of heart problems beyond what can be accomplished by existing statin drugs (and let's hope they are right). Statin drugs work by lowering bad cholesterol, and although the approach works for many, it's not the best route according to many medical experts.