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FDA drug approvals off in 2016, but expected to rebound

Andrew Harnik/Associated Press/File

Among the many statistics that illustrate the biopharma industry’s rough-and-tumble 2016, drug approvals fell to their lowest total in nearly a decade after a booming few years.

What happened?

If you ask the Food and Drug Administration, drug makers got a little worse at their jobs, and the agency got better at its own.

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But some analysts say it’s probably just a calendar-related blip that should give way to a more profligate 2017 and beyond.

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First, the numbers: In 2016, the FDA approved just 20 drugs, 65 percent less than in 2015 and the fewest since 2007. The 2015 total of 45 was the most since 1996, as was 2014’s 41.

The big drop in approvals came even though the number of new-drug applications held steady for six years, at between 36 and 41 a year.

The FDA’s explanation for the decline is twofold: For one thing, rejections of new drugs more than quintupled in 2016, but most of them were related to manufacturing problems, not issues with the drugs themselves. Fix those problems, the FDA says, and approvals will ensue.

Second, the FDA’s recent efforts to speed up the approval process mean five drugs that would have been cleared in 2016 ended up in the previous year’s class of new therapies, the agency said. (Of course, by this logic, a similar number of drugs should have been approved in 2016 that would otherwise have slipped over to 2017.)

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Through programs like priority review and the so-called breakthrough designation, the FDA has worked to shorten the path to market for treatments that could change the standard of care for particularly dire diseases.

Some are giving the numbers an optimistic spin: Biopharma is going through a shift. Many of the blockbuster pills of yesteryear have since gone generic, and some of the world’s biggest biotech drugs are headed for biosimilar competition. But over the next two years, cell and gene therapies are widely expected to pass FDA muster, ushering in a new era for the industry.

From that perspective, 2016 could just be a fallow period between biopharma epochs.

“I think FDA is expecting a bounce-back year in 2017 from their public comments based on submissions with decision dates next year,” Ramsey Baghdadi, cofounder of the Washington analysis firm Prevision Policy, said in an e-mail.

And the future could bring a quicker path to profits. The newly enacted 21st Century Cures Act promises to accelerate the development of therapies by allowing the FDA to shorten review times for certain drugs.

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But that’s all cold comfort to a drug industry facing a decline in scientific productivity.

According to a recent analysis from Deloitte, biopharma’s return on R&D investment fell from 10.1 percent in 2010 to just 3.7 percent last year. The costs of inventing and marketing a drug have largely plateaued at around $1.5 billion, according to the report, but the average annual peak sales for new drugs has fallen 11.4 percent since 2010 to $394 million.

Whether 2017 will bring a bumper crop of approvals is anyone’s guess, but at least a few of next year’s expected drug launches look like blockbusters in the making.

Analysts predict a multiple sclerosis treatment from Roche and an eczema drug from Sanofi and Regeneron Pharmaceuticals will both reach peak annual sales above $4 billion after their expected 2017 approvals. And soon-to-be-approved cancer drugs from AstraZeneca, Novartis, Eli Lilly, and Tesaro are forecast to reach blockbuster status by 2022, according to EvaluatePharma.

That said, those figures all depend on biopharma being able to charge what it pleases for new products, something the industry cannot take for granted. Political pressure over drug pricing has escalated over the past year, and analysts warn the industry is on thin ice when it comes to public perception.

Thanks to the FDA’s latest approval, another pricing firestorm may well be brewing. Biogen’s Spinraza, approved last month, will cost $750,000 in the first year and $375,000 a year thereafter.

Spinraza treats a genetic disorder that affects just 9,000 people, and rare-disease drugs have so far been insulated from pricing controversies. But Biogen’s drug could be “the straw that breaks the camel’s back” in that market, Leerink analyst Geoffrey Porges wrote to investors, with the price “likely to invite a storm of criticism, up to and including presidential tweets.”

Considering that President-elect Donald Trump’s two-sentence critique of drug pricing sent biotech stocks reeling last month, that could be a bigger problem for the industry than FDA productivity.

E-mail Damian Garde at damian.garde@statnews.com. Follow him on Twitter @damiangarde. Follow Stat on Twitter: @statnews.