Drug companies have never liked the FDA. Why should a government agency tell them whether their drugs are safe or effective? The FDA approval process can be a long one, and often new treatments are turned down.

According to The Wall Street Journal, the head of Schering-Plough (NYSE:SGP) believes that an "intensifying focus on safety and a diminished tolerance for side effects at the Food and Drug Administration have dramatically lowered the odds that the drugs would make it to market -- at least not without a lot of extra time and money."

Perhaps if pharmaceutical companies had a better track record for safety, the process would not to be so long. It is not that long ago that the FDA discovered that anti-depressants could lead to suicidal thoughts. More recently the agency warned that anemia treatments including Aranesp, Epogen and Procrit increased the risk of strokes and heart attacks.

Drug company earnings may be hurt by a long FDA approval process, but, without the current system there would likely be an increase in deceased patients.

Douglas A. McIntyre is an editor at 247wallst.com.

Amgen (NASDAQ: AMGN) closed at $44.62 Tuesday.

On 3/13/08, the FDA Oncologic Drugs Advisory Committee (ODAC) is scheduled to review the use of Erythropoiesis stimulation agents, including Aranesp and JNJ's Procrit, to treat chemotherapy induced anemia.

AMGN March option implied volatility is at 51; April is at 41; above its 26-week average of 33 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

It is interesting to see how one piece of news can have a different impact on two stocks. The news? The Food and Drug Administration found that anemia drugs are tied to increased risks of death and faster-spreading tumors at high doses.

Amgen Inc. (NASDAQ: AMGN) makes Aranesp and Epogen, while Johnson & Johnson (NYSE: JNJ) makes Procrit, all used to help cancer and kidney disease patients overcome anemia. But now the FDA says these drug show greater risks for patients with certain cancers on tumor progression and survival, as well as blood clots. While both companies believe the risks were seen when the drugs were given for unapproved uses, including higher-than-recommended doses, it is possible that following the study, the FDA may recommend to end the use of these drugs for patients whose anemia is caused by cancer chemotherapy, or who are at greater risk, but still allow it for kidney disease patients.

Still, as some analysts believe, with the recent updates both companies had on product prescribing and labeling, it is unlikely the drugs will be completely inadvisable for use in cancer patients as they allow the cycle of chemotherapy to continue more smoothly, helping to strengthen them after each treatment. It is more likely the companies will work with the FDA for better regulation on these drugs.

On the news, Amgen shares fell nearly 2%, while JNJ shares climbed over 1%. Surprising? Not really.

The headline on the Johnson & Johnson (NYSE:JNJ) earnings release says that revenue rose 13.2%. It did, but it didn't. Adjusting the numbers for the company's purchase of Pfizer's (NYSE:PFE) consumer health business and sales were only up 3.2% to $15.1 billion.

A quick look at the company's segment data shows a more accurate picture. JNJ's pharma division revenue rose 5.8% to $6.1 billion. The company's medical device units, which includes stents, had a revenue increase of 5.1% to $5.4 billion. US growth in the unit was only 1.1%.

A few of the company's key drugs like PROCRIT lost ground. Its sales fell 6% to $758 million. Sales of DURAGESIC were down 14% to $289 million.

While the company showed pro forma figures of its consumer division to demonstrate the benefits of the Pfizer deal, it would appear that they too were underwhelming. If the company's total sales rose 3.2% with Pfizer numbers included in both years and JNJ's two other big divisions up over 5%, the consumer segment must not have done very well.

JNJ stock is down 1.3% to $63. That's what fuzzy numbers will get you.

Douglas A. McIntyre is a partner at 24/7 Wall St.