MannKind Corp. (NASDAQ: MNKD) is suffering another setback from the U.S. Food & Drug Administration. While the FDA has been far from a friend to MannKind over the past few years, the latest FDA panel backing may have given diabetes patients and diabetes investors some much stronger conviction that the FDA’s PDUFA date of April 15 for its inhalable insulin Afrezza would finally come with a formal marketing approval. That hope was diminished a bit on Monday morning.

What 24/7 Wall St. wants to know now is just how much all these delays from the FDA will drive up the cost of Afrezza, assuming it is ultimately approved. Inhalable insulin is an idea that has been around for years — including a prior failure from Pfizer Inc. (NYSE: PFE). The FDA has repeatedly not been a fan, pushing out the Afrezza formal approval or denial for years and years. With millions of diabetes patients out there, this could easily become a mega-blockbuster drug.

With such a strong panel backing of late, the bias had changed handily to Afrezza being approved, versus a pre-panel bias of another delay or non-approval. That bias now would be somewhere in between.

MannKind’s statement simply said:

MannKind today announced that the U.S. Food and Drug Administration (FDA) has extended the Prescription Drug User Fee Act (PDUFA) date for AFREZZA® by three months to July 15, 2014 in order to provide time for a full review of information submitted by MannKind in response to the FDA’s requests.

So, back to those cost concerns for Afrezza users. MannKind has spent more than $500 million in the past three years alone trying to get Afrezza approved. Total costs have now eclipsed more than $1.5 billion in R&D and operating costs to get Afrezza just to this point.

It turns out that testing and retesting of drugs in multiyear studies involving hundreds and thousands of patients comes at a serious price. The FDA process has delayed approval and driven up the testing costs for MannKind. Obviously safety has to be the first concern in an FDA approval process, but at the same time it is without a doubt that the endless delays in approving Afrezza will increase the price to patients and the insurance companies covering it.

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As far as why this will be (or can be) a blockbuster drug, the American Diabetes Association projected a year ago that the total costs of diagnosed diabetes in 2012 was $245 billion, up from $174 billion in 2007. The long and short of the matter is that quite literally billions of dollars are up for grabs here. Now the question is whether MannKind can succeed where Pfizer’s Exubera failed.

On the closing bell a week ago, MannKind just missed the 100 million share mark in volume and the stock closed up 74% at $7.00. After about an hour of trading on Monday, MannKind shares were down by 8.5% at $6.30 on more than 14 million shares. MannKind shares have traded in a 52-week range of $3.60 to $8.70.

Businessweek opined in 2013 that Afrezza’s cost could be somewhere around the same as traditional insulin costs of $2,000 per year. The real question is whether that cost can remain as the continued test and regulatory approval costs keep mounting.

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A chart from Drugs.com shows how many steps there have been in the formal FDA approval process for Afrezza.

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