GlaxoSmithKline is in Congressional crosshairs over its marketing of Avandia, and investors aren’t happy either.

The controversy over whether the firm adequately warned patients of the drug’s cardiovascular risks, raised by a May New England Journal of Medicine article, shows no signs of abating and will be the subject of congressional hearings tomorrow. The Committee on Oversight and Government Reform, chaired by Rep. Henry Waxman (D-CA), will hear from Avandia critic Dr. Steven Nissen of the Cleveland Clinic, FDA Commissioner Andrew von Eschenbach and GSK R&D chief Moncef Slaoui.   

The FDA also is scheduled to convene two advisory committee meetings July 30 to discuss the cardiovascular risks of the oral Type 2 diabetes drug.

As the controversy brews and GSK tries to reassure the public, its stock has suffered and Avandia’s prescription numbers are eroding. Shortly after the NEJM report appeared last month stating that Avandia may cause a 43% higher risk of heart attacks than other drugs, GSK shares slid 12%, cutting $19.7 billion from the company’s market value.

A 2005 review by Glaxo, similar to the one cited by Nissen, found that Avandia raised the risk of reduced blood flow to the heart, including heart attacks, by 31%. The company submitted the review to the FDA and posted it online, along with more than 2,000 studies. GSK said the heart-risk studies, including its own, are flawed and it isn’t obligated, or legally bound, to highlight every study done on its drugs.

The company’s failure to place as much emphasis on Avandia’s risks as it placed on the drug’s benefits may hurt it because of possible legal liability, Morgan Stanley analysts wrote. Avandia is facing competition from newer treatments, and reports of a heart risk may hurt sales by as much as 50%, they estimate. Data from IMS Health released yesterday showed a 21% decline in new Avandia prescriptions and a 16% drop in total US prescriptions in the first week after the NEJM report, notes Reuters.

Last week, the world’s number-two drug firm began a concerted effort took to shore up confidence in Avandia. The firm’s chief medical officer, Ron Krall, and president of US pharmaceuticals unit, Chris Viehbacher, came to the drug’s defense in a campaign to challenge the NEJM findings and help the stock recover.

Today the firm took out full-page advertisements in at least a dozen major U.S. newspapers.

Last year, GSK spent $849 million on consumer advertising, the most of any drug firm, according to Nielsen Monitor Plus statistics cited by Bloomberg. By 2005, the Avandia DTC marketing budget had reached nearly $200 million, all for ads advising US consumers to ask their doctors about GSK’s second best-selling drug.

Ads included warnings contained in prescribing information. A 2005 TV spot cautioned, “Avandia may cause fluid retention or swelling, which can make some heart problems worse or lead to heart failure.”

However, the FDA has criticized GSK for continuing to “engage in false or misleading promotion of Avandia.” A 2001 letter said the firm was denying or minimizing the increased risk of “heart failure or other cardiovascular adverse events” in patients taking the drug with insulin, notes Bloomberg.