Thursday, January 03, 2008

Another Dismal Year for New Drug Approvals

When does a drought stop being a drought, and just become a desert?

That question has to be raised when contemplating yet another disappointing year for innovative pharmaceutical launches in the US.

FDA approved just 17 new molecular entities in 2007—the lowest single year total since 1983, when there were 14 NME approvals.

FDA’s official tally will probably be 19, including two therapeutic biologics approved by the Center for Drug Evaluation & Research. FDA began including biologics in its total in 2004, so that makes historical comparisons difficult. But even if you count all 19, this was still the worst year since 1983.

That’s 25 years ago, folks. Gandhi won best picture. Toto won album of the year. A Philadelphia sports team actually won a championship.

If you want to understand the decline in productivity industry wide, consider this: total R&D spending by brand-name companies in 1983 was $3.2 billion, compared to $43 billion in 2007. In other words, the industry spent $228 million per NME approved in 1983, compared to $2.5billion each in 2007. Or, if you prefer, the extra $40 billion in R&D spending brought with it a total of five additional therapies.

Big Pharma didn’t have anywhere near as many mouths to feed in 1983 either. The entire domestic brand business was just under $17 billion, according to data reported by the Pharmaceutical Research & Manufacturers of America trade association. Domestic sales of brand companies today are ten times higher. (If you haven’t read Roger Longman’s post yesterday about the importance of adjusting industry infrastructures, please do so now.)

Of course, looking at any single year doesn’t tell you anything about the overall health of the new product flow in the industry. Pharmaceuticals do have a relatively long commercial life, so as long as there is a health bolus of new products every few years, things should be fine.

Unfortunately, looking across multiple years doesn’t make the picture any brighter. Last year was the worst for new product launches since 1983. The second worst? 2005. Third worst? 2006. Fourth? 2002. In fact, FDA has approved more than 30 novel molecules only once this decade, when it cleared 36 in 2004. FDA approved more than 30 every year in the second half of the 1990s.

Or consider this: over the past three years, FDA has approved a total of 61 new molecular entities and novel biologics. The agency approved 60 in 1996 alone.

We like to track our own statistic, Innovative Commercial Therapies. That represents our attempt to measure the number of truly novel molecules (no enantiomers, metabolites or pro-drugs, where the basic question—is it safe and effective in humans?—has already been answered; no diagnostics; and no non-commercial products like biodefense agents developed by the Department of Defense.)

We think that gives a more accurate indication of the real output of big pharma and biotech pipelines. That only makes the picture that much grimmer: there were just 14 ICTs in 2007. Below are the statistics over the past decade.

If you divide that chart in half, you can see that FDA approved a total of 199 ICTs in the six years from 1996 through 2001. That compares to just 122 in the six years from 2002 through 2007, a decline of 39%.

Okay, enough gloom and doom. Looking on the bright side, at least there were fewer first time generic launches in 2007 than there were new molecular entity approvals. As we reported last year, for the first time in memory the industry suffered a net loss of patented medicines in 2006.

Of course, it was a close race. By our count, there were 14 first time generic launches in 2007, balanced against the 16 NMEs. And boy is it hard to imagine the crop of new drugs launched in 2007 matching the commercial peaks of the brands that lost exclusivity—products Norvasc, Ambien, Lamisil, Coreg, and Protonix.

And, since the industry suffered a net loss of two patented molecules in 2006, that means that the entire pharmaceutical industry has only stayed even in the number of patented medicines on the market for the past two years. That, to put it mildly, is not a recipe for sustained growth in the industry in the years ahead.

Bear in mind that, not only is the absolute number of new product approvals declining, so is the likely peak market size for new products. In other words, at a time when the industry desperately needs the pipeline to pump out more new products than ever, it is getting only a trickle.

Something needs to change.
Please Note: This post has been updated.
Our initial count of drug approvals in the IN VIVO Blog was off by one. It turns out there were 17 new molecular entity approvals, not 16—Fresenius Kabi’s hypovolemia agent Voluven (hydroxyethyl starch) was approved December 27.
Voluven was approved under the 505(b)(2) mechanism as equivalent to other blood volume enhancers, so it definitely does not add to our benchmark statistics (innovative commercial therapies, or ICTs). The extra NME also doesn’t change anything else in our analysis: 17 NMEs is still the lowest total since 1983, as is 19 novel molecules (NMEs plus novel biologics). Voluven is nevertheless an interesting approval: it is the latest example of the emerging follow-on biologics pathway at FDA.

What’s that? You think there is no such pathway? Not so. Congress has yet to enact a legislative pathway for follow-on versions of biologics regulated under the Public Health Service Act. But for biologics that happen to be regulated under the FD&C Act (like human growth hormone, insulin, insulin-like growth factor, etc. etc.) follow-on approvals keep trickling out of the agency. Look for more on that topic as well, coming soon in The RPM Report.

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