When It Comes to NDA Approvals, Is 30 the New 50?

In 2011, the FDA approved 30 New Medical Entities (NMEs) filed either as New Drug Applications (NDAs – small molecules) or Original Biologic License Applications (BLAs – therapeutic biologics).  This is the largest number of approvals since 36 new drugs were approved in 2004.  Furthermore, on average only 23 new drugs were approved in the previous decade, so the 2011 total is pretty impressive.  People are debating whether this represents a turnaround for the biopharmaceutical industry or a one year aberration.  Regardless, as good as 2011 was, there is no doubt that the number of new drugs produced by the industry is significantly lower than what it produced in the 1990s.

When people talk about this issue, they always use 1996 as their starting point.  In that year, the FDA approved 53 NMEs, an all-time high.  However, using the 1996 data as a starting point for a productivity discussion is totally inappropriate as THAT was a one year aberration.  In the early 1990s, the U.S. was undergoing a “drug lag,” that is, drugs were being approved more rapidly abroad than in the U.S.  As a result, a number of drugs were languishing at the FDA for years before approval.  Needless to say, Congress got involved and they realized that the FDA was under-resourced to approve drugs in a timely fashion.  To solve this problem, Congress enacted the Prescription Drug User Fee Act (PDUFA), a mechanism whereby charges were levied on pharmaceutical companies for each new drug application filed.  The revenues from these “user fees” were used to hire 600 new drug reviewers and support staff.  This personnel increase enabled the FDA to work through the backlog of NDAs.  The record number of NDA approvals in 1996 is a result of this.

(As an aside, the user fee in 1995 for a full NDA was $208,000.  In 2012, the fee is $1,841,500.  Considering that fewer NDAs are being filed, given the nine-fold increase in PDUFA user fees, one might wonder why all drugs can’t be approved with a six months review time.)

Nevertheless, the FDA approved 315 new drugs from 1991 – 2000.  Thus, despite the progress in technologies for drug discovery and development, as well as the wealth of information that has emanated from the Human Genome Project, the number of new drugs emerging annually has dropped significantly.  What may account for this?  For one thing, due to industry consolidation, there are fewer companies producing new drug candidates.  In 1988, the Pharmaceutical Research and Manufacturing Association (PhRMA) had 42 members.  Only 11 of those companies exist today.  While there are biotech companies like Amgen that have arisen over this timeframe, there haven’t been nearly enough new companies formed that could make up for this decrease in NDA-producing organizations.  Back in 1990, if a new idea for treating cancer arose, 25 different companies would have jumped on it.  Given the challenges inherent in R&D, one might assume that 4 or 5 of these companies would have been successful in getting such a drug approved.  Things are quite different now.  With fewer companies competing, the chances for success drop precipitously.  Not only are there then fewer NDAs produced, you also wind up getting fewer entrants in a new class of drugs, which provides fewer choices to patients, physicians and payers.

Another reason for the decrease in NDA output is the result of the higher safety and differentiation hurdles experimental medicines face.  For a new drug to be a commercial success these days, it needs to be differentiated from existing therapies.  In addition, the FDA is requiring that new compounds are effective in treating the disease itself and not just impact markers of the disease.  For example, a new compound that lowers LDL (“bad”) cholesterol might be of value, but the FDA now requires data actually showing that such an agent actually reduces heart attacks in a patient population with cardiovascular disease.  In the 1990s, simply lowering LDL was enough to get FDA approval.  Outcomes studies, if they were done at all, would be done after the drug was approved and marketed.  Now, extensive clinical trials are needed and the new agent not only has to reduce heart attacks and strokes, it also needs to do so better than the generic statins.

The impact on industry productivity as a result of higher differentiation and efficacy hurdles can be seen in the decrease in compounds clearing late stage (Phase 3) clinical studies.  In the 1990s, >90% of compounds entering Phase 3 received FDA approval.  Data from Arrowsmith (Nature Reviews Drug Discovery Vol. 10, 87, February 2011) suggests that only 50% of compounds entering Phase 3 get FDA approval. Phase 3, which prior to 2000 served to confirm results from early smaller scale clinical trials, now is a major hurdle in determining a drug’s ultimate medical and commercial value.  The drugs that emerge from such vigorous trials are likely to be major advances.  However, fewer of these occurrences happen now than a decade ago.

For  NDA approvals, the 1990s can be viewed as an era when there were many large organizations producing multiple compounds that didn’t need to be differentiated from existing therapy nor show multiple year safety and disease reduction in patients.  The rules, however, have changed.  The hurdles and costs for new drug development are higher than ever before.  As a result, to expect the industry to produce 50 new drugs per year is unrealistic, regardless of technology advances.  Thirty is the new 50.