WASHINGTON (Reuters) - The nation's top drug regulator said on Monday he aims to cut the time it takes to bring new medicines to the public, while still ensuring that any negative side effects are promptly reported to the government.

Speaking at the annual meeting of the Biotechnology Industry Organization in Washington, U.S. Food and Drug Administration (FDA) commissioner Mark McClellan said the agency will soon announce new initiatives to reduce the cost of drug development by cutting the time the agency spends reviewing applications.

The agency will also work closely with drug developers to ensure that new drug applications are properly organized from the first time they are submitted, he said.

That would avoid time-consuming and costly setbacks such as the 2001 rejection of ImClone System Inc.'s application to market its experimental cancer drug Erbitux because the agency was unhappy with how the trials were conducted and the data were organized.

After the FDA's refusal, shares of ImClone sharply declined, setting in motion an insider trading scandal and delaying potential approval of Erbitux by at least two years.

Since taking the job in 2002, McClellan has repeatedly made clear he intends to speed the drug review process. Over the past six months, some half-dozen new drugs have been approved, some unexpectedly, helping lift the American Stock Exchange Biotechnology Index of biotech stocks more than 50 percent since March.

McClellan said he thinks the gain in the sector is justified.

"I, too, think the upswing in the industry is real," he said.

He noted, however, that while the FDA is "working hard" to reduce the cost of drug development, biotechnology companies must do their part to cut development time by devising new research techniques.

Reduced time for development, he said, makes it more critical than ever that companies promptly report any problems that arise from the use of new medicines.

"The FDA has always relied on a voluntary reporting system for adverse events," he said. "The truth is there are countless adverse events that go unreported."

He said he plans to institute systems to ensure that adverse side effects are reported in a timely way.

For instance, McClellan said the FDA plans to introduce a real-time electronic monitoring system that will help alert the agency of potential risks with newly approved drugs.

Many drugs are approved on the condition that companies conduct further clinical trials to monitor the drug's performance in a wider population. Few companies actually conduct such trials.

"If we have this information, we can have more confidence that potential problems will be identified," said McClellan, who spoke after President Bush at the biotechnology conference.