Industry

Dismal FDA drug approval rate leads to sector inquiry

European Commission conducts surprise inspections on major pharmaceutical companies

A release in early January from Sagient Research Systems (CA, USA), whose BioMedTracker closely monitors clinical trial and drug approval data, claimed that FDA drug approvals had declined by 13% since 2006. The company also revealed a 40% increase in the number of approvable letters issued, which are sent to companies when FDA requires additional data before it will approve a new drug. These letters often cause huge delays for pharmaceutical companies as they may have to conduct further research and additional clinical studies. Michael Hay, senior analyst and product manager for BioMedTracker, attributed the low approval rates to several high-profile events during the past few years, such as the withdrawal of Merck's once-popular painkiller, Vioxx, in 2004 because of mounting safety concerns. "The FDA has received a lot of criticism over several high-profile adverse events cases, including Vioxx, Tysabri and Avandia. This has triggered an overly cautious approach to new drug approvals at FDA," says Hay. "Other potential reasons for the decline in approval rates cited in our report include an increase in adverse event reports, increased workload for FDA employees and a high turnover rate at FDA."

However, the European Commission is concerned that there may be more suspicious reasons underlying the lack of new medicines, especially with respect to generics. While it acknowledges that regulatory environments and the normal functioning of the patent system have implications on market entry, it questions whether they can be held entirely responsible for the decrease in approvals, and whether anticompetitive practices have been employed, such as in the AstraZeneca case in 2005 when the company was fined €60 million for misuse of the patent system and marketing procedures to delay generic versions of its ulcer drug Losec.

Although Sagient only referenced the decline in approvals since 2006, it would seem there has been a draught in R&D for years. Preliminary data from FDA indicate that 2007 had one of the lowest number of approvals of New Molecular Entity Drugs and New Biologic since 1983. The European Commission also noted that during 1995–1999 an average of 40 novel molecular entities were launched per year, but during 2000–2004 the average figure per year was only 28. In response, the Commission conducted surprise inspections on a number of pharmaceutical companies based on selective criteria including, for example, relating to the competitive environment of these companies. The inquiry will be the first that has ever begun with unannounced inspections. "The inspections are just the starting point of a broad inquiry; a starting point that will ensure that the Commission has immediate access to the information it needs to guide its next steps," says Kreos. "The kind of information the Commission will be examining, such as the use of intellectual property rights, litigation and settlement agreements, is, by its nature, information that companies tend to consider highly confidential. Such information is always easily withheld, concealed or destroyed. That is why we decided that inspections were necessary."

The inspections were coordinated with the competition authorities of the Member States where the inspections took place, and the European Commission claims it noted that the competition authorities in several Member States were themselves actively examining several cases in the pharmaceutical sector.

Pfizer, Merck and AstraZeneca were among the first to receive the unannounced visits. The inquiry is not based on evidence of wrongdoing and the companies that have been targeted have not been accused of any unlawful practices, but the inquiry will examine whether anticompetitive practices have been employed. It will investigate whether agreements between pharmaceutical companies, such as settlements in patent disputes, may infringe the EC Treaty's prohibition on restrictive business practices (Article 81). It will also look into whether companies may have created artificial barriers to market entry of novel and generic medicines, whether through misuse of patent rights, vexatious litigation or other means, and whether such practices may infringe the EC Treaty's ban on abuses of dominant market positions (Article 82). If any specific cases against companies are opened, these will be launched in their own right, outside of the framework of the sector enquiry.