Policy Research Institute page Drug lag: Why are unapproved drugs increasing?

Printable PDF

The number of unapproved drugs in Japan has been increasing in the late 2010s, according to a survey conducted by the Policy Research Institute News*1 and the National Cancer Center*2. In order to answer the question, "Why are unapproved drugs increasing?", an analysis of the factors contributing to the increase in the number of unapproved drugs for anti-cancer and neurological agents revealed a significant increase in the number of products from startup companies, an earlier phase of pivotal trials (for anti-cancer agents), and less inclusion of Japan in pivotal trials for the products upon their approval in the US. The number of Japanese regions incorporated into pivotal trials at the time of U.S. approval of the product was low. This paper presents an analysis of the reasons for the increase, as outlined in Policy Research Institute News No. 66, "Drug Lag: Why Are Unapproved Drugs on the Rise? (July 2022).

1. Introduction

The number of unapproved drugs increased in the late 2010s. The increase in the number of unapproved drugs has been attributed to the fact that many of them are products of emerging biopharmaceutical companies that do not have Japanese subsidiaries or domestic custodians, suggesting that they have not been developed in Japan*1*3 and that many of these unapproved drugs are drugs of high clinical importance*4. The increase in the number of unapproved drugs is an undeniable challenge for access to modern Japanese drugs. The increase in the number of unapproved drugs is an issue that should not be overlooked for access to medicines in Japan, and its causes and countermeasures need to be examined.

This report analyzes the characteristics of unapproved drugs in Japan for the U.S. Food and Drug Administration (FDA)-approved drugs (new active ingredients) for anti-cancer and neurological agents from 2011 to 2020, and examines the background and factors behind the increase in unapproved drugs to determine the direction for eliminating the increase in unapproved drugs.

2. research methods

The analysis covered 104 anti-cancer drugs (104 items) and 32 neurological drugs (32 items) in the disease areas*1*4 with a large number of unapproved drugs among the items approved by the FDA from 2011 to 2020. Pivotal studies at the time of FDA approval*5 were identified from Prescribing Information, and clinical trial information was obtained from ClinicalTrials.gov*6*7. 7 Companies were categorized by Evaluate Pharma, with startups defined as those established after 1990, and all other companies defined as pharmaceutical companies. The impact on the increase in the number of approved drugs was estimated using a logistic regression analysis and a linear model with least squares using statistical analysis methods.

3. analysis results

3-1. breakdown of unapproved drugs in japan: anti-cancer drugs

During the study period, there were 44 and 60 anti-cancer drugs approved by the FDA in the first and second terms, respectively. Of these, 27 and 41 were unapproved in Japan in the first and second terms, respectively, and the ratio of unapproved drugs in Japan increased from 61% to 68% ( Figure 1 ). The same increase was observed in the anti-cancer drugs as in the previous report*1.

Figure 1: Change in the Number and Percentage of Unapproved Antineoplastic Agents

Source: Prepared by the Pharmaceuticals and Industrial Policy Research Institute based on publicly available information from the FDA and the Pharmaceuticals and Medical Devices Agency (PMDA).

Figure 2 shows the change in the number of unapproved drugs by classifying applicants to the FDA as either startups or pharmaceutical companies. In the category of startup companies, the number of approved drugs increased slightly from 2 to 3, while the number of unapproved drugs in Japan increased markedly from 6 to 22. For pharmaceutical company items, there was no significant change in the number of both approved and unapproved drugs between the previous period and the second period, indicating that the increase in the number of unapproved drugs in Japan was due to an increase in the number of emerging company items.

Figure 2 Number of unapproved drugs by company category

Source: Compiled by the Pharmaceuticals and Industrial Policy Research Institute based on publicly available information from the FDA and PMDA, and Evaluate Pharma.

In order for a drug to be approved in Japan without lagging behind its overseas counterparts, it is important that the pivotal trials at the time of overseas approval are internationally collaborative trials and that the Japanese region is incorporated into the trials. Figure 3 shows the results of a survey on the inclusion of the Japanese region in pivotal studies at the time of FDA approval. First, looking at the number of pivotal studies, 43 (98%) were conducted in the first half and 53 (88%) were conducted in the second half. Pivotal trials that incorporated the Japan region increased in both number and percentage of products, from 11 (25%) in the first semester to 21 (35%) in the second semester. In order to ensure access to the latest drugs in Japan, the Ministry of Health, Labour and Welfare (MHLW) issued the "Basic Policy on Global Joint Clinical Trials" (2007), and pharmaceutical companies made efforts to incorporate Japanese regions into global joint clinical trials, and the review authorities made great efforts to shorten the review period*6*7. However, the percentage of pivotal trials without Japanese incorporation (65%, 39 products) remained high, and there were concerns about the possibility of an approval lag and unapproved drugs.

Figure 3: Japan's status in pivotal trials of anti-cancer drugs

Note: Trials that included two or more countries were defined as international clinical trials. In the case of multiple trials, late clinical phases were counted.
Source: Created by the Pharmaceutical Industry Policy Institute based on public information from FDA and PMDA, and ClinicalTrials.gov.

Figure 4 shows the change in the number of unapproved drugs, categorized by the presence or absence of Japanese regional incorporation.

The number of unapproved drugs with Japan region incorporation increased from 4 to 6, while the number of unapproved drugs without Japan region incorporation increased significantly from 23 to 35. For unapproved drugs in the latter half of the period, the ratio of unincorporated products reached 85% (35/41 products). Among approved drugs, the number of drugs with Japanese incorporation doubled from 7 to 15, while the number of drugs without Japanese incorporation decreased from 10 to 4, indicating that Japanese incorporation into international clinical trials is progressing.

The increase in the number of unapproved drugs in Japan was found to be due to the increase in pivotal trials without Japanese regional incorporation.

Figure 4: Pivotal studies in Japan

Note: Trials that included two or more countries were defined as international clinical trials.
Source: Created by the Pharmaceutical Industry Policy Institute based on public information from FDA and PMDA, and ClinicalTrials.gov.

We examined what countries and regions were included in pivotal trials for 60 drugs in the latter half of the period ( Fig. 5 ). Of the 19 drugs approved in Japan, 18 were in international collaborative trials, and the number of incorporated drugs in Japan (15) was comparable to that of the G7 countries. South Korea (13 items) and Taiwan (10 items) were also included in a large number, indicating that international joint clinical trials are being promoted in Asian countries as well.

Among the 41 drugs not approved in Japan, 34 were in international joint trials and 6 were in single-country trials. In the G7 countries excluding Japan, about 30 items were included, while only 6 items were included in Japan. In Asia, Korea (16 products) and Taiwan (11 products) were included, indicating that the inclusion of the Japanese region was less than that of Korea and Taiwan. The smaller number of entries than in Korea and Taiwan, which have smaller populations and smaller pharmaceutical markets, suggests that there are differences in the regulatory and clinical trial environment in the Japan region. Among unapproved products from emerging companies, 19 of the 21 products were in international clinical trials, and the trend in incorporation countries was similar to that for unapproved products overall.

Figure 5: Regions incorporated into anti-cancer agent pivotal trials in 2016-2020

Note: Of the FDA-approved drugs for 2016-2020, 19 are Japan-approved drugs (19, left chart) and 41 are Japan-unapproved drugs (41, middle chart), indicating regions with 5 or more drugs incorporated into pivotal studies as of the end of 2020. Of the unapproved drugs, those from emerging companies (21 drugs, right panel) represent regions with 3 or more drugs.
Source: Created by the Pharmaceutical Industry Policy Institute based on public information from FDA and PMDA, Evaluate Pharma, and ClinicalTrials.gov.

In the later stages of FDA-approved products, there has been an increase in pivotal trials in the early clinical trial phase (Phase 1 to Phase 2) [5]. Looking at the change in clinical trial phases from the first semester to the second semester ( Figure 6 ), for unapproved drugs, Phase 3 remained unchanged at 13 items, while Phase 2 (13 to 18 items) and Phase 1/2 (1 to 8 items) increased. In the latter half of the year, two Phase 1 products were also seen. In Japan, the number of Phase 2 and Phase 1/2 drugs increased to 6 and 2, respectively, while the number of Phase 3 drugs (11) decreased.

The increase in the number of unapproved drugs was found to be an increase in the number of drugs in early clinical trial phases (Phase 2, Phase 1/2, and Phase 1) (from 14 to 28), as the number of Phase 3 drugs did not change from 13.

Figure 6 Number of Unapproved Drugs by Clinical Trial Phase

Note: In the case of multiple pivotal trials, trials in the later phases are counted.
Source: Compiled by NIID based on public information from FDA and PMDA, Evaluate pharma, and ClinicalTrials.gov

The increase in the number of unapproved drugs can be broken down into: 1) an increase in the number of start-up products, 2) earlier pivotal trial phases, and 3) low Japanese inclusion rates in pivotal trial phases.

For each of these factors, we used statistical methods to estimate the magnitude of their impact on the increase in unapproved drugs ( Table 1 ).

Table 1: Impact on the Increase in Unapproved Drugs

Source: Created by the Pharmaceuticals and Industrial Policy Research Institute

Logistic regression analysis using data for 104 products showed statistically significant differences in three impact factors: "Emerging Company Products," "Early Pivotal Phase," and "No Inclusion of Japan Region. The odds ratio of an unapproved drug was estimated to be 8.9 times higher when the Japan region was not incorporated than when it was incorporated, indicating a significant impact. The results of the linear probability model using the least-squares method also showed statistical significance in both cases. The probability of unapproval was found to be 44% higher without the inclusion of the Japan region than with the inclusion of the Japan region, and 18% and 17% for the startup and early pivotal phase, respectively, indicating that the absence of the Japan region had the highest probability of unapproval among the three factors evaluated. The results of the above statistical analysis indicate that the probability of unapproved drugs is the highest among the three factors evaluated. The results of the statistical analysis indicate that the lack of inclusion of Japan in pivotal trials is the most important factor for the increase in unapproved drugs, followed by emerging companies and early clinical trial phases.

The breakdown of the increase in unapproved drugs was broken down by company category and pivotal phase, and analyzed in detail ( Fig. 7 ). The breakdown of the increase of 16 products from the previous period (6 products) to the later period (22 products) in emerging companies was broken down into 11 products in Phase 2 and 6 products in Phase 1/2 and Phase 1, for a total of 17 products (77%) in the early clinical trial phase, an increase of 13 products from the previous period. In the unapproved drugs of pharmaceutical companies, there was no significant change in the number of items, but the ratio of early clinical phase increased to 58% (11 items in total), compared to the previous period.

Figure 7: Pivotal study phases by company category

Note: In the case of multiple pivotal trials, late phase trials are included.
Source: Created by NIID based on public information from FDA and PMDA, Evaluate Pharma, and ClinicalTrials.gov

We further analyzed the company classification and the incorporation of the Japan region in the pivotal clinical phase ( Figure 8 ).

The number and percentage of pharmaceutical companies included increased from 10 items (28%) in the previous period to 15 items (43%) in the second period. Although the number of new companies also increased from 1 (13%) in the previous period to 6 (24%) in the latter period, the incorporation rate was lower than that of pharmaceutical companies. In Phase 3, the number and percentage of pharmaceutical companies increased from 7 (29%) to 9 (56%), and in Phase 2, the percentage increased from 2 (20%) to 5 (38%). On the other hand, the percentage of Phase 1/2 included in the second half of the year was low at 17% (1/6 items). Emerging firms showed low incorporation into early phases in the late period, with 3 items (38%) incorporated into Phase 3, 2 items (18%) into Phase 2, 1 item (25%) into Phase 1/2, and 0 items (0%, 0/2 items) into Phase 1, compared to 1 item in the previous period.

Although there was an increase in the rate of Japanese incorporation into pivotal trials from Phase 1 to Phase 2, it was evident that the rate of incorporation in the Japanese region was low in the later phases for emerging company items and early clinical trial phases.

Fig. 8: Japan inclusion by clinical trial phase and company category

Note: In the case of multiple pivotal trials, late phase trials are included.
Source: Prepared by the Pharmaceuticals and Industrial Policy Research Institute based on public information from FDA and PMDA, Evaluate Pharma, and ClinicalTrials.gov.

3-2. Breakdown of Unapproved Drugs in Japan: Nervous System Drugs

We also examined the status of unapproved drugs in Japan for nervous system drugs approved by the FDA during 2011-2015 and 2016-2020 ( Figure 9 ). The number of FDA-approved products for nervous system drugs more than doubled from 12 to 30. The number of Japanese unapproved drugs increased significantly from 9 (75%) to 22 (73%), in proportion to the increase in the number of FDA-approved drugs, confirming the increase in the number of unapproved drugs. The number of products incorporated into pivotal trials in Japan increased from 3 (25%) in the first half of the year to 6 (20%) in the second half of the year, but the percentage of products incorporated decreased, and the percentage of products incorporated was low in both periods.

Figure 9: Unapproved drugs for nervous system

Note: In the case of multiple pivotal trials, late phase trials are included.
Source: Created by NIID based on public information from FDA and PMDA, Evaluate Pharma, and ClinicalTrials.gov

The FDA approval status of neurology products and Japan's inclusion in pivotal trials are broken down by company category ( Figure 10 ). In the latter half of the period, however, the focus shifted to emerging companies' products. The number of unapproved drugs and the ratio of unapproved drugs in Japan did not change among pharmaceutical companies, but the number of unapproved drugs increased significantly from 2 (67%) to 14 (70%) among startup companies. The percentage of Japanese regions included in pivotal trials increased slightly from 3 (33%) to 4 (40%) for pharmaceutical companies and from 0 to 2 (10%) for emerging companies, but the percentage of Japanese inclusion was particularly low for emerging companies, at 40% for pharmaceutical companies and 10% for emerging companies.

The increase in the number of unapproved FDA-approved drugs for neurological agents was found to be due to an increase in the number of items from emerging companies in the latter half of the period and the lack of incorporation of the Japanese region, as was the case with anti-cancer drugs.

Figure 10: Unapproved drugs for nervous system by company

Note: In the case of multiple pivotal trials, late phase trials are included.
Source: Created by NIID based on public information from FDA and PMDA, Evaluate Pharma, and ClinicalTrials.gov

3-3. characteristics and environment of emerging companies' business

In order to get a closer look at the actual status of startups, we followed the business history of 26 of the 29 startups (33 products) that submitted applications to the FDA for anti-tumor agents from 2011 to 2020, for which we were able to obtain company information, from company establishment to FDA approval.

The median time from incorporation to FDA approval for each of the 26 companies was calculated to be 4 years and 3 months from incorporation to listing, and 14 years and 11 months from incorporation to FDA approval. The median time from incorporation to FDA approval for each of the 26 companies was 4 years and 3 months, 14 years and 11 months from incorporation to FDA approval, and 6 years and 9 months from listing to FDA approval. Looking at the sales of pharmaceuticals by startups in the year prior to FDA approval and five years prior to FDA approval, 17 (65%) had no pharmaceutical sales in the year prior to FDA approval and 21 (81%) had no sales five years prior to FDA approval ( Figure 11 ).

It takes about 15 years for a start-up company to bring a new drug to market, and most of these companies had no sales revenues prior to approval. It was again recognized that these companies do not have ample funds to pursue R&D over a long period of time.

Figure 11: Sales of emerging companies for anti-cancer drugs

Note: Represents data for 29 emerging companies with FDA-approved antineoplastic agents from 2011-2020.
Source: Prepared by the Pharmaceutical Industry Policy Institute based on FDA public information and Evaluate Pharma.

However, the inclusion of other countries in the pivotal study may be based on the balance between R&D efficiency and expected earnings in each country if the product is successful, i.e., the so-called return on investment. This is thought to be a balance between the efficiency of research and development and the expected return on investment in each country if the product is successful. In order to analogize how each country's pharmaceutical market is perceived by U.S. startups, we have plotted the market size relative to the U.S. market ( Table 2 ). When the size of the U.S. pharmaceutical market is set at 100 for each year and the size of the pharmaceutical market in each country or region is indexed, growth is seen only in China (CAGR of 4.7%), and negative growth is seen in Europe (-3.1%) and Japan (-6.1%). In terms of size, Europe had more than half (56%) of the U.S. market in 2020, while Japan (16%) had a small market size of just over one-seventh of the U.S. market. The small size of the Japanese market was reflected in negative growth, suggesting that the Japanese drug market is not considered an attractive market and may not be a priority investment for startups.

Table 2: Market Size Relative to the U.S. Pharmaceutical Market

Note: Market size is indexed by the sales value of each country/region, with the U.S. sales value as 100.
Source: Copyright (c) 2022 IQVIA. Prepared by the Pharmaceutical Industry Research Institute based on IQVIA World Review, Data Period - Year 2010- 2020 (All rights reserved)

Most of the startups do not have a development organization in Japan. To determine the status of development in Japan, we examined the development status of startups in Japan (as of April 30, 2022). 33 (29 companies) and 23 (21 companies) of the anti-cancer and neurology products approved by the FDA between 2011 and 2020, respectively, were from startups. The first was M&A by pharmaceutical companies, the second was out-licensing of products in the Japanese territory, and the third was in-house development of the Japanese market ( Fig. 12 ).

Looking at the development status of 33 anti-tumor drugs (29 companies) by business type, 11 drugs (9 companies) were acquired by global pharmaceutical companies, including one Japanese company, one to two years after FDA approval, and their domestic development status was either approved (8 drugs) or under development (3 drugs). Nine products were out-licensed to Japanese pharmaceutical companies either globally or in the Japanese territory one to two years after FDA approval, and either approved (4 products) or in development (5 products). Among the 13 in-house drugs, the startups with multiple products had established Japanese subsidiaries and were developing two drugs in Japan (two approved and two in development). However, many of them had no information (9 products), and there was no indication that they were under development as of the end of April 2022. In addition to not being listed in the surveyed databases, the "no information" category includes items for which domestic clinical trials had been conducted but there were no further reports or the trials were terminated, so it was inferred that the scientific usefulness of the drug may not have been verified.

For items from emerging companies, it was suggested that while M&A and out-licensing are advancing commercialization in Japan, the process period of company-to-company negotiations, etc., may also be an approval lag. In addition, 9 drugs remained without information, indicating the risk of drug loss.

Figure 12: Antineoplastic Drug Items of Emerging Companies in Japan

Note: Development status as of the end of 2021 for 33 FDA-approved anti-cancer agents (29 emerging companies) from 2011-2020.
Source: Prepared by the Pharmaceutical Industry Policy Institute based on FDA public information, Evaluate Pharma, and New Drugs for Tomorrow.

Among the 23 neurological products (21 companies) ( Figure 13 ), M&A was observed in 1 product and out-licensing in 11 products, all of which were either approved or under development. In our own classification, only one of the 11 products was developed in Japan, but for 10 products, we did not find information on clinical development in Japan, indicating a risk of drug loss.

Figure 13: Status of Nervous System Drug Products of Emerging Companies in Japan

Note: Development status as of the end of 2021 for 23 neurological products approved by the FDA between 2011 and 2020 (21 emerging companies).
Source: Prepared by the Pharmaceutical Industry Policy Institute based on public information from the FDA, Evaluate Pharma, and New Drugs for Tomorrow.

4. discussion

The most influential factor in the increase of unapproved drugs in 2016-2020 was the lack of Japanese inclusion in pivotal trials. In particular, the low rate of inclusion in pivotal studies of emerging company products was a major factor, along with the increase in FDA-approved products from emerging companies. In response to the question, "Why is Japan not included in pivotal trials of emerging companies?" This section examines this question from the aspect of investment decision making of emerging companies: R&D and expected business value.

Most of the anti-tumor agents were conducting global clinical trials, but the inclusion of the Japanese region seemed to be a low priority. Since many Asian countries such as South Korea, Taiwan, Hong Kong, and Singapore, which have small populations and small pharmaceutical markets, were included, it was considered that it may be difficult to select the Japan region in terms of the clinical trial environment in terms of the number and speed of patient enrollment, complexity of procedures (including preparation of Japanese-language documents) for starting a trial, and costs of clinical trials. In addition, Japan was not included in the global joint clinical trials. In addition, when Japan is included in a global clinical trial, additional clinical trials, such as tolerability evaluation in Japanese patients, must be conducted in advance due to pharmaceutical regulations, which may be a hurdle to inclusion. From the perspective of emerging companies, issues related to regulatory affairs and clinical trials in the Japanese region will require deeper scrutiny.

One can imagine that there is motivation to incorporate Japan into global clinical trials when an emerging company wants to expand quickly into the Japanese market or increase the value of its business during M&A and out-licensing. However, Japan's relative market size has shrunk over the past decade, and it is analogous to a market that is perceived as a negative growth market, so investment in Japan business development was considered a low priority for start-ups with limited investment resources. There is a limit to what can be inferred from publicly available information as to why emerging companies have not included Japan in their pivotal studies, and it may be necessary to conduct interviews with individual companies to determine the actual situation.

The actual status of Japanese business development of emerging companies' products was that one to two years after FDA approval, business development in Japan was attempted through M&A and out-licensing. The attractiveness of the Japanese drug market may be important from the standpoint of economic rationale for decisions by pharmaceutical companies and Japanese firms to enter into early-stage business alliances with emerging companies or when introducing products.

The drug lag issue that was discussed prior to 2010 has been greatly improved as pharmaceutical companies have promoted the participation of Japanese regions in international joint clinical trials and the review period for regulatory approval has been shortened. The issue has become more complicated this year with the increase in the number of products from emerging companies, which is showing signs of a new drug lag. Although the reasons for the lack of inclusion of the Japanese region in pivotal trials by emerging companies, which is the main cause of the increase in unapproved drugs, have not yet been clarified, in order to resolve this issue, it is necessary to consider "how to ensure the inclusion of the Japanese region in international joint trials of emerging company items" or "how to ensure that emerging companies and Japanese, European, and U.S. What is needed for emerging companies and Japanese, European, and U.S. pharmaceutical companies to cooperate in the development of the Japanese market at an early stage? To address these issues, beyond corporate efforts, we believe it is important to have policies that provide incentives for foreign start-ups to incorporate Japan, and policies that enable pharmaceutical companies to guarantee profitability when developing their business in Japan. In order to ensure access to the latest pharmaceuticals to Japan, we hope to see further discussion of policies that take into account changes in the global drug development landscape.

Furthermore, when placing the highest priority on access to the latest pharmaceuticals to Japan, it may be necessary to review regulations, such as allowing approval based on data from efficacy studies conducted overseas, rather than using Japanese data. As personalized medicine progresses and the number of drugs tailored to individual patients increases, we sincerely hope that discussions will continue on the state of pharmaceutical regulations as well as the advancement of science so that the usefulness of drugs can be evaluated without excessive attention to ethnic and environmental factors.

( Shinichiro Iida, Senior Researcher, Pharmaceutical and Industrial Policy Research Institute)

Back to Newsletter Top

TOP