CommonSense Blog

FDA: A Year in Review, and the Year Ahead

By Adam P. Silverstein | Jan 07, 2014

In 2013, the United States Food and Drug Administration (FDA) approved 27 new drugs.

Many of those with a vested interest in healthcare, especially investors and analysts, view that number as “a barometer of industry innovation and the federal government’s efficiency in reviewing new therapies” as Matthew Perrone wrote for the Associated Press.

And compared to 2012, when the FDA approved 39 new therapies, some investors, analysts, and journalists are sounding the alarm bell about this decline in new drugs approved and what it means for pharmaceutical research and development.

Case in point: John Carroll, writing for Fierce Biotech, argues that the 27 new drugs approved in 2013 represent an “ominous” trend that “that once again raises big questions about the productivity and sustainability of the world’s multibillion-dollar R&D business.

Yet in my view, using the number of new drug approvals to measure the success of pharmaceutical companies is short-sighted. Don’t get me wrong – Carroll argues later in his article that 2013 was actually a good year for drug companies overall. But as we head into 2014, it’s important to look back at the broader landscape and achievements of both FDA and biotechnology and biopharmaceutical companies. Here are three trends that I hope continue in 2014.

  1. Fewer approvals doesn’t mean less revenue: According to the industry publication EP Vantage, combined revenues from drugs approved in 2013 represent an estimated $18.7 billion, easily beating last year’s projection of $16.4 billion.  The Wall Street Journal also noted that sales of drugs in company pipelines “are expected to more than offset the drag from pills losing patent protection in coming years.”
  2. “Me-too” drugs are going by the wayside: Innovative, life-saving drugs are coming to the forefront, especially for hard-to-treat conditions and rare diseases. In fact, one-third of drug approvals last year were for rare diseases. Biogen Idec won approval for its multiple sclerosis drug Tecfidera, Gilead got the nod for Solvaldi for Hepatitis C, and Roche’s Gazyva received approval for chronic lymphocytic leukemia. This is truly great news for patients.
  3. Innovative therapies are also coming to market more quickly: The FDA’s breakthrough therapy designation (BTD), along with adequate funding for the agency, is working. Drug makers, FDA, investors, and, most importantly, patients, are all benefitting.  The BTD, awarded to drugs that may treat a serious or life threatening disease or condition or show strong clinical evidence of an improvement over existing therapies, went into effect in 2012. Last year, only three products were approved with this designation. However, the FDA has granted BTD status to 37 compounds, according to Leerink Swann, and represents a “big influence” on investors.

Of course, the macro R&D landscape isn’t without its challenges. One that I’ll be especially interested to see in 2014 is whether, as The Wall Street Journal suggests, there’s a slight shift this year away from oncology drugs to other areas of unmet need, which I’d argue suffered last year.

In 2013, oncologic drugs, by my count, represented almost 30% of total approvals. Yet according to Barclays, one-third of R&D spending is going towards oncology and inflammation even though they account for less than 17% of total projected revenues. Drugs for cardiovascular disease and neurological illnesses together comprised only 18% of all drugs approved. Deutsche Bank has said that drugs for schizophrenia and depression form a $33 billion market, with investors willing to tolerate the high-risk nature of R&D for these products.

So, what do you hope to see from industry and FDA in 2014? I’d love to hear your thoughts.