2016 FDA Drug Approval Trends

Posted by Nancy Park, Pharm.D, from Ogilvy CommonHealth Market Access - North America on February 13, 2017


The beginning of the year is an exciting time to prognosticate on pharmaceutical innovations that are on the horizon for 2017. However, without a functioning crystal ball along with a front-row seat at the FDA Panel Review table, it would be just that – prognostication. Instead, I’d like to invite you to join me on the proverbial time machine to reflect on FDA drug approval trends from 2016, as this may enlighten us on the forecast for drug approvals in 2017.



2016 turned out to be an interesting year in terms of novel drug approvals. FDA’s Center for Drug Evaluation and Research (CDER) defines a “novel drug” as an innovative product that serves previously unmet medical needs or otherwise significantly helps to advance patient care and public health.1 CDER’s January 2017 annual report on novel drug approvals states that in 2016, of the 41 novel drug application filings, only 22 were approved – only a 53% approval rate.1 The number of novel drug approvals in 2016 was far less than the average over the past decade.1 In comparison, from 2007 to 2015, CDER approved an annual average of 30 novel drugs out of an average of 36 filed applications – an 83% approval rate.1 So while the number of applications for novel drugs remained relatively stable, the number of approvals decreased quite a bit, with 2016 having the lowest number of approvals since 2010.1,2


The FDA’s Director of the Office of New Drugs provided some insights on this dramatic reduction in novel drug approvals in 2016 following the 19-year high novel drug approval rates in 2014 and 2015.2 Part of the rationale was that some of the drugs slated for approval in 2016 had achieved an earlier approval in late 2015. However, the main reason for the dramatic decline in novel drug approvals in 2016 was a combination of a decline in drug applications as well as an increase in FDA’s rejection/delays of application reviews compared to the previous 2 years.



While 2016 proved to have the lowest ratio of novel drug approvals to novel drug applications over the last decade, significant healthcare strides were made with 36% of novel drug approvals for “first-in-class” drugs and 41% for “orphan drugs.”1 The FDA also acknowledges “innovation” by categorizing a novel drug application with “Fast Track,” “Breakthrough,” “Priority Review,” and “Accelerated Approval” status. A whopping 73% of novel drug applications in 2016 fell under one of these categories, signifying great strides in terms of innovative drugs. So perhaps the trend for novel drug applications now veers towards quality, not quantity? But how is quality of drug innovation measured? Clearly, its impact on public health and overall acceptance within the medical community is an indicator of drug innovation.


Another way to assess the magnitude of innovation may be to look at its commercial success. However, this should be taken with the grain of salt that commercial success is also dependent on pricing strategies and marketing variables.3 A recent publication measured the quality of drug innovation from 2011 to 2015 for 13 pharmaceutical companies with what they termed the “freshness index” (i.e., sales from recently approved drugs). Based on their “freshness index,” very few pharmaceutical companies stood out as a leading innovator that reliably produced well-performing novel drugs.3 Of the approximately $75 billion that was spent on R&D leading to drug approvals in 2011, only $37 billion was recouped in 2015.3 A Reuters article discussed research showing that the return on investment (ROI) on research and development (R&D) for the top 12 pharmaceutical companies fell to 3.7% in 2016 from a high of 10.1% in 2010.2 These are all daunting ROI stats given that the drug approval process is an arduous, unpredictable process.


The overall likelihood of approval (LOA) from the Phase 1 stage is only 9.6%; however, there are interesting variations in the LOA, such as4:


• Chronic diseases with large patient populations had a lower LOA

• Hematology products had the highest LOA (26.1%) from Phase 1

• Oncology products had the lowest overall LOA (5.1%) from Phase 1; however, there is a lot of activity in oncology research, and hematological cancers had 2x higher LOA compared to solid tumors

     • Oncology products also had a 2x higher rate of first cycle approval compared to psychiatric drugs and were also approved the fastest of all the disease states

• Rare disease programs that used selection biomarkers had higher success rates at each clinical development stage



Oncology dominated US venture funding investments.5 On the other hand, diseases with high prevalence rates (e.g., gastrointestinal, respiratory, endocrine, and infectious disease) have seen decreased venture funding over the past decade.


US Venture Funding Trends5:


• Oncology: 89% went towards novel R&D investment; in 2015, over $2 billion was allocated to oncology companies – the largest in a decade and a 66% increase over 2014

• Neurology: Increased for a fifth year in a row and was 2x higher in 2015 compared to 2014; 40% allocated to Alzheimer’s or Parkinson’s disease

• Metabolic disease: 300% increase in 2015 compared to 2014; majority were for rare genetic disorders



We’ve traversed multiple rabbit holes at a very high level to explore the drug approval trends of 2016. While the overall number of approvals substantially decreased in 2016, many of the drug applications received an FDA designation acknowledging their differentiated clinical value. I’ll conclude with a hopeful outlook that 2017 will provide many innovative and life-changing drugs for a broad spectrum of conditions. Hopefully the best is yet to come in 2017…and beyond.


1. U.S. Food and Drug Administration. 2016 Novel Drugs Summary. http://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/DrugInnovation/UCM536693.pdf. Accessed January 10, 2017.
2. Hirschler B. (2017, January 2). New drug approvals fall to six-year low in 2016. Reuters. http://www.reuters.com/article/us-pharmaceuticals-approvals-idUSKBN14M08R. Accessed January 12, 2017.
3. Munos B. A new look at the most innovative pharma companies (and whether they are sustainable) -Part I. http://www.forbes.com/sites/bernardmunos/2016/03/18/a-new-look-at-the-most-innovative-pharma-companies-and-whether-they-are-sustainable-part-i/#da9fa135dbf3. Accessed January 12, 2017.
4. BIO, Biomedtracker, Amplion. Clinical Development Success Rates 2006 – 2015. https://www.bio.org/sites/default/files/Clinical%20Development%20Success%20Rates%202006-2015%20-%20BIO,%20Biomedtracker,%20Amplion%202016.pdf. Accessed January 13, 2017.
5. Thomas D, Wessel C. Emerging therapeutic company investment and deal trends. https://www.bio.org/sites/default/files/BIO_Emerging_Therapeutic_Company_Report_2006_2015_Final.pdf. Accessed January 13, 2017.