On Any Given Afternoon, the FDA Can Make or Break a Fortune

I often write about how you can use political intelligence to make a fortune. If you have the right understanding of current public policy, you can position yourself to profit from firms many have never heard of.

But there’s another, equally important, use for political intelligence. If you track what agency officials are saying or doing, you can often see around the bend and keep yourself from losing a fortune, too.

That’s why I’ve been watching the U.S. Food and Drug Administration (FDA) for years. It’s notorious for making and breaking many firms and fortunes. From big drug companies to tiny startups, everyone is subject to the FDA’s whims.

Just this week, shares of Ambit Biosciences Corporation (AMBI) plummeted 33% in one trading session. The drop came after some unsatisfactory FDA reports on Ambit’s oncology drug, Quizartinib.

Despite thousands of hours of research and millions of dollars invested, the firm – and its investors – was reeling after this latest encounter with the FDA.

The FDA claims to be looking out for your health, but after watching closely, I’ve realized that its decisions have little to do with your well-being. Instead, they’re made to garner power and protect the profits at the big pharmaceutical companies that are the FDA’s political allies.

In fact, the FDA is downright fascist in the way it disregards the free speech rights of anyone that gets in the way.

Just ask the CEO of Aegerion Pharmaceuticals, Marc Beer. He appeared on the CNBC TV show “Fast Money” and as a result received a formal “WARNING LETTER” (the FDA used all caps so I repeat them here).

It’s interesting to note that he didn’t receive the warning letter for lying to the audience. He received a warning letter because he described how Aegerion’s drug, Juxtapid, helps patients in ways the FDA hasn’t approved.

And the FDA never challenged what he said; it only warned him for talking. Here’s a summary quote from the FDA warning: “The safety and effectiveness of JUXTAPID have not been established in patients with hypercholesterolemia who do not have HoFH. The effect of JUXTAPID on cardiovascular morbidity and mortality has not been determined.”

Well, Marc Beer likely won’t be back on TV any time soon. He knows, as the other CEOs of firms beholden to the FDA know, that you can’t fight. You can only submit. Get on board with the FDA, or it will put you out of business, sick people be damned!

You can be sure that if Beers would’ve fought back, Aegerion would’ve felt the pain. Without FDA approval, pharmaceutical companies are as good as dead.

What’s more, Congress recently gave the FDA additional powers to regulate compounding pharmacies. Compounding pharmacies have been used by practitioners of alternative therapies for years, including many of the holistic therapies that involve natural compounds and herbs. Expect the crackdown on alternative medicine to grow in the next few years as the FDA fully exploits its new powers. Companies in this sector are sure to suffer as a result.

The bottom line is that political intelligence is a powerful tool. As I’ve mentioned, it can give you an early look at companies that are about to notch incredible gains. But it can also keep you one step ahead of investment pitfalls. Preventing losses is as important as reaping profits.

And when it comes to the FDA, using political intelligence can help protect your wallet AND your well-being.

To life, liberty, and prosperity,

Floyd Brown

Floyd Brown

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