UPDATE 2-US FDA adds heart warning to diabetes drug Avandia

(Writes through with reaction from Congress, analyst, consumer groups)

By Julie Vorman and Maggie Fox

WASHINGTON, Nov 14 (Reuters) - GlaxoSmithKline's (GSK.L) (GSK.N) Avandia will carry a "black box" warning that says the diabetes drug could cause chest pain or heart attacks, the U.S. Food and Drug Administration said on Wednesday.

The company will also start a trial comparing Avandia head to head with a rival drug, Takeda Pharmaceutical Co's (4502.T) Actos and perhaps other drugs, to see if the risk is unique to Avandia, the FDA said.

In the meantime, doctors should monitor patients closely for any heart effects, the FDA advised.

"We are keeping Avandia on the market because we have concluded that there is not enough evidence to conclude that the risk for heart attack or cardiac ischemia is higher than for other type-2 diabetes drugs," the FDA's Dr. Janet Woodcock told reporters in a phone briefing.

The studies have been inconclusive and those that appear to show a risk all compare Avandia to a placebo, she said.

The top-selling diabetes drug has been under scrutiny since a U.S. analysis last May linked Avandia to a 43 percent higher risk of heart attack in patients.

Glaxo's shares fell 1.2 percent to $50.00 on the New York Stock Exchange, in a broadly weaker U.S. market.

Mehta Partners analyst Shaojing Tong said it was a "slight positive" that the new warning called available data "inconclusive." But he said it would not help revive sales.

"I think it will be lucky for GSK if they can keep it at this level. I see it continuing probably to go down a little bit over time," he said.

Avandia and Actos both already carry strong warnings advising of the risk of heart failure, a chronic condition that affects the heart's ability to pump blood.

Avandia was Glaxo's second-biggest drug in 2006, with sales of $3 billion, but sales have plunged since May, with revenues in the United States down 48 percent in the three months to Sept. 30 from the year-ago period.

Avandia, known generically as rosiglitazone, and rival drug Actos, known generically as pioglitazone, were designed to make the body more sensitive to insulin. The FDA said they were not meant to reduce the heart risks caused by diabetes.

HOPE FOR A COMEBACK

"Avandia remains a safe and effective medicine for most patients with type-2 diabetes when used appropriately," Dr. Ronald Krall, Glaxo's chief medical officer, said in a statement.

The company's chief executive, Jean-Pierre Garnier, told Reuters on Monday that the new black box warning, which had been widely expected by analysts, would not necessarily be a disaster and predicted Avandia could yet stage a comeback.

Iowa Republican Sen. Chuck Grassley said the FDA's Drug Safety Oversight Board had voted only very narrowly, 8-7, to keep Avandia on the market.

"The system is off balance, and that's not good for public safety," Grassley said in a statement.

FDA officials said they consulted widely before making the decision. Two different advisory committees voted on whether to keep Avandia on the market, Woodcock said, including the committee that approved the drug and another committee that monitors drug safety afterwards.

"We took into account a very broad variety of opinions," she said. "We don't expect everyone to agree at the end of the day."

Meanwhile, Glaxo will prepare a study to show whether Avandia does raise the risk of heart attacks or clogged heart arteries more than other diabetes drugs. The study design will be prepared by next July and the study will be completed by 2014, the FDA's Dr. John Jenkins said.

But the agency will review data as the study proceeds, in case there is a clear indication something is going wrong.

"It isn't as if we are going to be clueless until 2014," Woodcock said.

The nonprofit Consumers Union, which publishes Consumer Reports, said people should avoid the drug.

"People with type-2 diabetes who have other risk factors for heart disease -- and that's most people with the condition

-- should avoid Avandia," Steven Findlay, managing editor of -- should avoid Avandia," Steven Findlay, managing editor of Consumer Reports Best Buy Drugs, said in a statement."

(With additional reporting by Lisa Richwine and Ben Hirschler; Editing by Braden Reddall)

((Maggie.Fox@Reuters.com; 1 202 898 8492)) Keywords: GLAXOSMITHKLINE AVANDIA/

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