Lately the FDA seems more reluctant to approve new drugs than it once was. Some observers believe that Merck's
Parsing the data
We'll look at the data from the two branches of the FDA responsible for approving all therapeutic drugs, and check for evidence of a slowdown in the recent number of new drugs coming onto the market. Using readily available FDA resources, I searched through the past eight years to calculate the number of new molecular entities (NME) and new biologics like Biogen Idec's
Looking at the number of "NME approvals" rather than "all drug approvals" should be a better proxy for the number of new drugs approved, because the "all drug" data available from the FDA includes things like new formulations of existing drugs, combination treatments of already-approved drugs, diagnostic compounds, and FDA approvals of non-therapeutic compounds like sunscreen products from L'Oreal or a paste developed by the U.S. Army to prevent chemical-weapons contact with skin.
These other products and follow-on drugs are interesting, but they are not a good measure of the FDA's approval of new drugs. Therefore, I count Merck's new diabetes treatment Januvia as a new drug approval, since it is a NME. But I don't count Merck's combination product Janumet, since it's just Januvia combined with the already-approved and long-genericized metformin.
The list of new drug approvals includes new vaccines and other new molecular entities approved from the FDA's two main branches. The Center for Biologics Evaluation and Research (CBER) is charged with approving or denying vaccines and some other biologic drugs. The FDA's Center for Drug Evaluation and Research (CDER) processes most of the new drug approvals, focusing mostly on small-molecule compounds.
CBER |
CDER |
Total New |
|
---|---|---|---|
2007* |
6 |
16 |
22 |
2006 |
8 |
24 |
32 |
2005 |
8 |
18 |
26 |
2004 |
2 |
33 |
35 |
2003 |
8 |
31 |
39 |
2002 |
3 |
21 |
24 |
2001 |
3 |
29 |
32 |
2000 |
3 |
29 |
32 |
Looking at the above data, if the last two months of 2007 keep pace with the first 10 months of 2007, then this year's pace of 26 new drug approvals (an average 2.2 a month) will tie for the second slowest year for drug approvals since 2002.
There are still several compounds -- like Neurocrine Biosciences'
Drawing conclusions
Other factors, like pharmaceutical drug pipeline productivity, and how long the FDA takes to review a New Drug Application, are also key variables in determining whether the FDA is being stingier in its approval of new drugs. These unknown factors make it difficult to draw hard conclusions from the above data.
With numerous compounds such as Novartis'
During his company's third-quarter conference call, GlaxoSmithKline's
Historically, most drugs that get hit with an approvable letter ultimately are approved. But those letters cost drugmakers valuable patent time as they work to remedy the FDA's concerns. Fewer years of marketing exclusivity for a drug before generic competition hits the market can cost drugmakers billions of dollars in lost revenue, leaving less money for research and development budgets to produce new drugs in the future.
I'll take a look at other ways of viewing this FDA data on Friday. The main conclusion that investors should draw from this exercise is that even in today's regulatory environment, the FDA's still approving drugs.
For drugs targeting specific ailments, or indications already well-served by existing medications, it may be best for investors to expect delays in FDA approval, especially in light of the Glaxo comment and abundant anecdotal evidence. For a large drugmaker like Pfizer, a delay in marketing might only mean lost sales, but for a development-stage drugmaker burning through its cash, an extended delay in approval of its lead drug could have horrible consequences.