FDA blamed for dip in new drugs

NEW YORK (CNNMoney.com) -- The pharma industry is suffering a dearth of new drug approvals thanks to an increasingly stringent FDA, according to a report released Wednesday.

The Food and Drug Administration approved 38 new drugs through July of this year, down 31 percent from 55 approvals during the same period in 2006, according to a report from James Kumpel, analyst for Friedman, Billings, Ramsey.

"They've raised the bar," said Kumpel. "They've made it more difficult for drugs to get through the system. The FDA has been pretty much playing defense since 2004."

Kumpel said the FDA is still stinging from its market approval of the arthritis painkiller Vioxx, which Merck & Co., Inc. (up $0.00 to $49.78, Charts, Fortune 500) pulled from the market in 2004, after studies showed a link between the drug and a heightened risk of heart attack or stroke. Since that time, more than 27,000 lawsuits have been filed against Merck, and the FDA has grown increasingly cautious about drug safety.

As examples of recent FDA actions, the agency on Aug. 14 strengthened heart failure warnings to "black box" levels for two diabetes drugs: Avandia from GlaxoSmithKline (up $0.00 to $49.72, Charts), and Actos from Takeda; the agency also accused Pfizer Inc. (up $0.00 to $23.53, Charts, Fortune 500) of false advertising of its anti-schizophrenia drug Geodon on Aug. 14; and on Aug. 13 it rejected an experimental anti-psychotic drug from Wyeth (up $0.00 to $45.54, Charts, Fortune 500) and Solvay Pharmaceuticals.

Kumpel of FBR said this year's approvals include only seven drugs that can be considered completely new, which is a 10-year low for the industry. These "new molecular entities," as they are known in FDA parlance, work in a completely different manner than drugs that are already on the market.

"[New molecular entities] are the break-though drugs that really start to carve out a new path, as opposed to combinations of existing drugs," said Kumpel.

But the dip in drug approvals can't be blamed entirely on the FDA, said Kumpel of FBR. Even as the agency has toughened its market review process by demanding more data from drugmakers, Kumpel said there has also been a problem with innovation: Big Pharma pipelines have been flat.

But Fran Hawthorne, author of "Inside the FDA," argues that there's nothing new about Big Pharma's lack of innovation. She said the drug approval slowdown is "far more [a result of the FDA's] paranoia than the pipelines."

"It's true that the pipelines are pretty dry at the drug companies, but the pipelines were dry five years ago when the FDA was approving more," said Hawthorne.

Hawthorne said that the regulatory policy "cycle always turns," and that the FDA will eventually lower the bar again, as patient advocacy groups complain that the sluggish review process keeps people from getting the drugs they need.

"If we don't get another scandal -- another Vioxx, another drug with horrible side effects -- then the pressure will be on the FDA to speed things up," said Hawthorne.

FDA spokesperson Susan Cruzan denied that her agency was getting tougher on drug applications.

"There have been no systematic changes in how we are approaching the approval standards for new applications," wrote Cruzan in an email to CNNMoney.com, adding that "each application is reviewed on its own merit."