Global Insight Perspective | |
Significance | As of 31 October, the FDA had approved only 15 drugs that could be classified as NCEs. |
Implications | The low approval number could be variously interpreted as evidence of tougher FDA approval standards or of a slowdown in pharmaceutical and biotech companies' ability to develop new medicines. |
Outlook | Whatever the reasons for the slowdown, two things are certain: firstly, that expectations over the number of blockbuster drugs reaching the U.S. market this year will have to be adjusted, and secondly, that there will be a fresh onslaught of generics, as some US$20 billion worth of branded drugs lose patent protection as early as next year. |
FDA Approvals Slow Down
FDA Approval of NCEs by Year | |
Year | NCE Approvals |
2006 | 22 |
2005 | 20 |
2004 | 36 |
Source: Global Insight based on FDA data. | |
Data on FDA approvals so far this year presents a grim picture. As of 31 October, the U.S. drug regulator had approved only 15 truly innovative drugs or new chemical entities (NCEs). The total excludes vaccines and older drugs approved for new indications or in new dosing formats. At this rate, the FDA will approve only 18 NCEs by the end of the year, according to an estimate from Dow Jones.
Outlook and Implications
A gradual slow-down in approvals has been evident since 2005, and has been partly attributed to FDA cautiousness after the high-profile withdrawal due to safety reasons of Merck's (U.S.) Cox-2 inhibitor Vioxx (rofecoxib). Standards have been changing since then, at least on a superficial level. Earlier this year, the FDA rejected another Merck drug, Arcoxia (eroticoxib), which belongs to the same class of anti-inflammatories as Vioxx. It also rejected Sanofi-Aventis's (France) first-in-class anti-obesity treatment Zimulti/Acomplia (rimonabant), which is already on sale in the European Union. There were also approval setbacks for treatments being reinvented in new indications, including Wyeth's (U.S.) anti-depressant Pristiq (desvenlafaxine) for the menopausal symptoms indication and Pozen/GlaxoSmithKline's (U.S/UK) migraine treatment Trexima (sumatriptan succinate/naproxen sodium). The reasons for refusing outright approval have varied from case to case, but it is clear that the FDA has grown more risk-averse and prefers to wait for additional data for first-in-class drugs and to carefully weigh the risks for drugs entering therapeutic areas with abundant treatment alternatives (see United States: 3 August 2007: Pozen, GSK Hit with New Trexima Delay and United States: 8 October 2007: Wyeth Acquires Scottish Firm, Provides Update on NDA Filing).
Having said that, the FDA has approved some NCEs this year without hesitation, including two first-in-class HIV treatments—Merck's Isentress (raltegravir) and Selzentry/Celsentri (maraviroc) from U.S. company Pfizer (see United States: 15 October 2007: FDA Green-Lights Merck's Isentress and United States: 7 August 2007: Pfizer Gains Maraviroc Approval, Provides Pipeline Update). The agency also has more funding for post-marketing trials under the new Prescription Drug User Fee Act (PDUFA), so it is expected to continue approving some risk-prone drugs while requiring rigorous testing.
On the flip side, there have been suggestions that there are fewer approvals because companies are less successful in developing new NCEs. The high cost of developing drugs—estimated to be well over US$1 billion—is partly to blame. However, there are other issues to consider. As pricing and reimbursement authorities across the world become more cost-conscious and pharmaco-economics analyses are more widely used, companies may voluntarily choose to stop development of an NCE if therapeutically superior treatments come to market. For example, Genaera (U.S.) terminated development of Evizon (squalamine) while it was in Phase III, in light of superior efficacy data for rival wet age-related macular degeneration (wet AMD) treatment Lucentis (ranibizumab) from Genentech, (U.S.; see World: 15 October 2007: The Lucentis Revolution: Competition in the Wet AMD Therapies Market Intensifies).
Whatever the reasons for the approval slowdown, we are looking at a future of slowing market growth in the U.S. pharma market. The shrinking number of approvals for NCEs is partly to blame—and within this group there will also be fewer drugs with blockbuster potential or a mass market. Certainly, there are biotech drugs to be approved, which typically command higher pricing premiums, but these will increasingly target smaller patient populations such as gene-dependent cancer subtypes or a subtype of HIV, as with Selzentry/Celsentri. As approvals for innovative blockbusters slow down and cost-containment measures intensify, a massive onslaught of generics is expected to sweep through the United States. Some US$20 billion worth of branded drugs are due to face patent expiry as early as next year. Increased generic availability and health insurer policies that favour generic substitution will drive the share of generics in the United States to an estimated two-thirds of prescriptions, according to the latest IMS study (see World: 1 November 2007: Emerging Markets To Trump U.S., Japanese Growth in Global Pharma Sales, Study Claims). Tough times are ahead for branded pharma, under the combined pressure of slower NCE approvals and increased competition from cheaper generics.