Please ensure Javascript is enabled for purposes of website accessibility

A Faster Pathway to Drug Approvals

By Brian Orelli, PhD - Updated Apr 6, 2017 at 12:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Too bad it's a long shot.

File this under "awesome but unlikely to happen." A thinktank called the Pacific Research Institute has proposed letting drugs approved by the European Medicines Authority (EMA) onto the market in the U.S. before the Food and Drug Administration has approved the drugs.

A radical idea, for sure, but the proposal has some merit:

  • The EMA does a pretty good job of reviewing drugs.
  • Of the drugs looked at by the institute, and which both agencies approved, the European agency approved the drugs 97 days faster than its U.S. counterpart, on average.
  • Patients could get medications more quickly. More importantly for investors, companies could get revenue with equal speed.

Drug

Company

Days between EU and U.S. approval

Vasovist

EPIX Pharmaceuticals

1,176

Banzel

Eisai

668

Toviaz

Pfizer (NYSE: PFE)

560

Uloric

Takeda Pharmaceuticals

298

Effient

Eli Lilly (NYSE: LLY)

135

Source: Pacific Research Institute.

In fairness, the FDA did finish first for some of the drugs approved by both agencies: Celgene's (Nasdaq: CELG) Vidaza, Gilead Sciences' (Nasdaq: GILD) Ranexa, Shionogi and Johnson & Johnson's (NYSE: JNJ) Doribax, and BioMarin Pharmaceuticals' (Nasdaq: BMRN) Kuvan, for instance. Still, this proposal would allow the best of both worlds. Drugmakers could launch whether the FDA or the EMA approved the drug first.

The Pacific Research Institute concludes that a little friendly competition couldn't hurt, either. And if you think about it, the author may be on to something. The FDA has a monopoly on drug approvals in the U.S., and as we all know, it's easy to get complacent when there's a lack of competition.

Sure, the FDA has some checks on its speed. The Prescription Drug User Fee Act (PDUFA) provides goals for making decisions about drugs in a timely manner, but there's no real punishment that I know of if the agency doesn't meet those goals.

Furthermore, that goal may actually be counterproductive. So many drugmakers get their FDA approvals on the PDUFA date that one has to wonder whether the FDA is finishing early, but doesn't want to announce the approval before its deadline, for fear of the ramifications if unforeseen side effects appear. Detractors would no doubt point to the early approval as a sign that the FDA didn't spend long enough reviewing the drug.

On the flipside, sanofi-aventis' (NYSE: SNY) Jevtana, a cancer treatment where side effects aren't that important, received an approval less than three months after the company submitted its marketing application. While that's the exception, it shows that the agency can move quickly if it wants to.

Of course, it won't ever happen
Politicians who make the laws won't go for the Pacific Research Institute's proposal, because the idea of allowing other countries to exert their control in our territory is ridiculous. Or so the politicians would say. Plus, I doubt the FDA bureaucracy would stand still while someone took away its power, either.

You only need to point to a drug such as Sanofi's obesity drug Acomplia, which was approved in Europe, but turned down in the U.S. because of psychiatric side effects. The drug inhibits the same receptor that marijuana stimulates, thereby avoiding the munchies, but increasing depression, anxiety, and stress disorders in patients. The EU eventually revoked the drug.

But the point is still there
The chance that the Pacific Research Institute's proposal makes it anywhere is pretty slim. But it could actually stimulate discussion to get at the root of the problem. FDA approvals take way too long, and in some instances, the agency is more conservative than it needs to be. That hurts patients, drug companies, and investors alike.

The PDUFA was a good start, but maybe it's time to kick up the speed a notch.

Pfizer is a Motley Fool Inside Value selection. BioMarin Pharmaceutical is a Rule Breakers recommendation. Johnson & Johnson is an Income Investor choice, and Motley Fool Options has recommended buying calls on its shares. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Eli Lilly and Company Stock Quote
Eli Lilly and Company
LLY
$304.61 (0.53%) $1.59
Sanofi Stock Quote
Sanofi
SNY
$45.20 (-7.11%) $-3.46
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$49.95 (0.34%) $0.17
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$170.67 (0.29%) $0.49
Celgene Corporation Stock Quote
Celgene Corporation
CELG
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
GILD
$63.14 (1.84%) $1.14
BioMarin Pharmaceutical Inc. Stock Quote
BioMarin Pharmaceutical Inc.
BMRN
$96.00 (0.31%) $0.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.