But the medication, to be marketed by Pfizer Inc., poses safety concerns. Patients in clinical trials have experienced a slight drop in breathing capacity, though Pfizer and its development partner Sanofi Aventis said the decline is not significant and plateaus after a while.

The FDA's panel of outside experts likely will focus on the long-term safety of Exubera, analysts said. The companies have completed a safety study tracking patients for two years, but little is known about the effects of Exubera on the lung beyond that time.

The review is taking place amid controversies about drug safety stemming from last fall's recall of Vioxx because of cardiac risks that became apparent years after the popular drug reached the market. In Congress, the FDA came under criticism for not monitoring drug safety closely enough.

While the Exubera panel isn't expected to discuss Vioxx, it will be on their minds. The FDA isn't required to follow the advice of its experts, but it often does.
If approved, Exubera, a powder that patients breathe through a six-inch inhaler, would be the first inhaled insulin. It was invented by Nektar Therapeutics of San Carlos, which licensed its technology to Pfizer.

Much is riding on Exubera for Nektar, an unprofitable company that has spent millions of dollars and 15 years on the technology. Exubera would be the first diabetes drug for Pfizer, the world's largest drug company. An approval would solidify its lead on competitors working on inhaled insulin, a group that includes MannKind Corp., a small device company in Valencia, Calif., and industry giant Eli Lilly & Co.

Exubera isn't better at managing blood sugar than injectable insulin, so convenience is the main reason to use it. And because Exubera is a short-acting insulin, patients who need a long-acting one at night will still require a shot before bed. The consensus is that the Exubera's sales potential is huge -- perhaps topping $1 billion annually -- because many patients find needles inconvenient, painful and frightening. A large number of patients who become diabetic later in life need insulin but don't take it because they are ''needlephobic.''

Because diabetes is a chronic condition, patients are likely to take Exubera for their entire lives. The regulators are expected to take a conservative stance and require more data ad infinitum.

Worries about lung damage delayed the FDA's review of Exubera three years ago while the companies conducted a two-year safety test. Although patients using Exubera saw a 1 percent to 1.5 percent decline in the breathing capacity, Pfizer's studies showed that the deterioration doesn't worsen over time and reverses itself when patients stop the drug.

Stephen H. Schneider, professor of medicine at Robert Wood Johnson Medical School in New Jersey, said safety risks appear minimal at this point. Diabetes specialists are watching the FDA review closely.

''In the first few years, we have not seen significant damage,'' said Schneider, who provided Exubera to patients in clinical trials sponsored by Pfizer. ''The big concern is how long do you wait to see if you have any lung problems. There are no easy answers.''