Policy Research Institute page Drug Lag: Comparison of the status of unapproved drugs in Japan and Europe -Based on U.S. approved drugs from 2010 to 2021

Printable PDF

The environment surrounding NHI drug prices has been getting tougher year by year, with the revision of the additional system for promoting the creation of new drugs and elimination of off-label drug use in the overhaul of the NHI drug price system in FY2018 and the implementation of the mid-year revision in FY2021, and many are concerned about a resurgence of a "drug lag" due to reduced incentives to bring drugs to market in Japan*1. This report analyzes the issue of unapproved drugs in Japan through a comparison of new drugs approved in the U.S. between 2010 and 2021, between Japan and Europe, and between pharmaceutical companies and startups, in Policy Research Institute News No. 67 "Drug Lag: Comparison of Unapproved Drugs in Japan and Europe. -Based on U.S. Approved Drugs from 2010 to 2021" (November 2022)*2.

1. Introduction

In the "Policy Research Institute News," we reported on the status of the drug lag in recent years and found that (1) the gap between the timing of drug launches in Japan and that in Europe and the U.S. has tended to shorten*3 , and (2) the number of "unapproved drugs" in Japan that have been approved in other countries but not yet approved in Japan has shown signs of increasing in the late 2010s, One of the reasons for this is that the number of drugs discovered by emerging companies, which are becoming more independent in their development activities, is increasing in Europe and the United States, and these companies do not have development subsidiaries in Japan, so they are not developing drugs in Japan*4; (3) Many unapproved drugs in Japan have a high clinical importance and are not approved in Japan. (4) The increase in the number of unapproved drugs in Japan is due to the low rate of inclusion of Japanese companies in international clinical trials, especially those conducted as pivotal trials for products of startup companies, which has led to the low level of expected business value in the Japanese clinical trial environment, pharmaceutical affairs system, and Japanese market. The low expected business value of the Japanese clinical trial environment, the pharmaceutical affairs system, and the development of new drugs in Japan are all factors that are expected to be addressed. In light of these results, a growing number of commentaries from various quarters are calling the current situation of foreign companies, including rapidly emerging foreign companies, passing through Japan without even starting drug development a new drug lag and calling it a "drug loss. The number of articles on this issue has been increasing. As society's interest in this issue grows, there is a need for further clarification of the facts and reality of the situation.

In order to gain a deeper understanding of the situation of the increase in unapproved drugs in Japan, this report expands the scope of the survey from the analysis of the status of unapproved drugs and factors in Japan, which has been the subject of previous studies, to a comparative study of the status of unapproved drugs in Japan and Europe, using new drugs in the United States as a benchmark. The U.S. is the largest market, accounting for approximately 40% of global pharmaceutical sales*7, with many of the first products launched in Japan, the U.S., and Europe*7, higher incentives for innovation through drug prices and other means*1 compared to other countries, the largest number of international clinical trials conducted by country*8, and a remarkable rise of emerging companies*9. 9 It is therefore sometimes regarded as a special country that sets itself apart from other countries. Therefore, a comparison of the approval status of new drugs approved in the U.S. in Europe, where the market environment is closer to that of Japan, would be useful information for analyzing the issue of unapproved drugs in Japan. In this report, we report on our analysis of unapproved new drugs approved in the U.S. from 2010 to 2021, comparing Japan and Europe, as well as pharmaceutical companies and start-ups.

Survey Methodology

The scope of this study included drugs with New Molecular Entity (NME) approved by the Center for Drug Evaluation and Research (CDER) of the U.S. Food and Drug Administration (FDA) from 2010 to 2021. NMEs were counted for drugs listed in the "New Molecular Entity (NME) Drug & New Biologic Approvals Calendar Year "*10. In Japan, NMEs are those listed in the "List of New Drugs Approved "*11 on the website of the Pharmaceuticals and Medical Devices Agency (PMDA), while in Europe, NMEs are those approved by the European Medicines Agency (EMA) through the central review process and listed in the "European Medicines Agency Annual Reports "*12. The European category includes pharmaceutical products approved by the European Medicines Agency (EMA) through the central review process and listed in the "European Medicines Agency Annual Reports "*12.

Companies were classified as Emerging Bio Pharma (EBP) if they were approved within 30 years of their establishment and had sales of less than US$500 million in the year prior to approval, and other companies were classified as Pharma (EBP) if they had sales of less than US$500 million in the year prior to approval. Other companies are classified as Pharma companies. Academia and NPOs were also listed separately. Standard statistical analysis software Stata/IC 14.0 for Windows (Stata Corp LP, College Station, TX, USA) was used for the analysis. For details on the statistical analysis methods and results, please refer to Policy Research Institute News No. 67*2.

3. comparison between Japan and Europe

3-1 Comparison of FDA-approved NMEs in Japan and Europe

First, we investigated the approval status of 481 NMEs approved by the FDA from 2010 to 2021 in Japan and Europe as of the end of 2021 ( Fig. 1 ), which were the subject of this study. As a result, 228 (47%) NMEs were approved in Japan and 253 (53%) were unapproved, while 326 (68%) were approved in Europe and 155 (32%) were unapproved. fewer products were approved and the approval rate was 21 percentage points lower (i.e., a higher percentage of unapproved drugs), indicating that many products have not yet entered the Japanese market.

Figure 1: Approval status of FDA-approved NMEs in Japan and Europe (481 items from 2010 to 2021)
Note: Approval status in Japan and Europe is based on information as of the end of December 2021.
Source: Prepared by the Pharmaceuticals and Industrial Policy Institute based on publicly available information from PMDA, FDA, and EMA.

Next, in order to compare the number of unapproved drugs in Japan and Europe, the number of unapproved drugs and approval rates in Japan and Europe for the 481 NMEs approved by the FDA were tabulated for each survey point (end of December of each year) ( Figure 2 ). The overall picture shows that the approval rate is lower in Japan than in Europe at all time points, and the number of unapproved drugs in Japan is higher than in Europe.

Figure 2: Aggregate number of unapproved drugs and approval rates in Japan and Europe for the 481 FDA-approved NMEs
Note: Approval rates are calculated from the following formula.
Approval rate = (Number of US NMEs approved in each year - Number of unapproved drugs) / Number of US NMEs approved in each year) x 100
Source: Prepared by the Pharmaceuticals and Industrial Policy Institute based on publicly available information from PMDA, FDA, and EMA.

3-2. Comparison of Approval Rates of FDA-approved NMEs in Japan and Europe (Statistical Analysis)

Using the data set in the previous section, panel data on trends in cumulative approval rates in Japan and Europe were created, and logistic regression analysis was conducted to examine the relationship between the number of years since the year of initial approval and approval rates for U.S. NMEs for the entire survey period (2010-2021), as well as for the earlier period (2010-2015) and later period (2016-2021). A logistic regression analysis was performed ( Figure 3 )*2 in order to

The results of the analysis ( Figure 3, left ) showed that the percentage of items approved in the same year (x=0) in the U.S. and Japan was 19%, while the percentage of items approved in the same year as the U.S. in Europe was 35%, a difference of 16 points. Comparing the levels at 5 years (x=5) and 10 years (x=10) after U.S. approval, the estimated approval rate in Japan increases over time to 59% at 5 years and 67% at 10 years, approaching the height where the curve asymptotes (68%). On the other hand, the estimated approval rate in Europe is 78% in 5 years and 78% in 10 years, indicating that the curve is already approaching the asymptote (79%) 5 years after the US approval. These indicate that the height of the curve is higher in Europe than in Japan, both initially and eventually (i.e., higher approval rates). And we see that Europe has a faster approval rate for U.S. NMEs than Japan, with a final approval rate estimate of 11 percentage points higher. In other words, while Europe has about 80% approval as early as 1-3 years after US approval, Japan's approval rate is estimated to be less than 70% even after 10 years, although the approval rate gradually increases over 10 years, indicating a greater risk of drug lag compared to Europe.

Next, the results are analyzed by dividing the years covered by the survey into the earlier period (2010-2015) and the later period (2016-2021) ( Figure 3, right). In the earlier period, 21% of items were approved in the same year in both the U.S. and Japan (x=0), while in the later period, 14% of items were approved in the same year in the U.S. and Japan. Comparing the estimated levels five years after approval in the U.S. (x=5), 59% of the products approved in the U.S. in the previous period will be approved in Japan, while 44% will be approved in Japan in the second period, a decrease of 15 points from the previous period. On the other hand, in Europe, the percentage of products approved in the same year in both the U.S. and Europe (x=0) was 43% in the previous year, while it was 29% in the second year, a decrease of 14 percentage points from the previous year. Comparing the estimated levels 5 years after approval in the U.S. (x=5), 79% of the products approved in the U.S. in the previous period are approved in Europe, while the level drops to 74% in the latter period. In other words, for both the Japanese and European poles, the height of the curve is higher in the earlier period than in the later period, both in the early and in the final period. Comparing Japan and Europe, there was a 22-point difference between the approval rates of Japan and Europe in the early period, but in the late period, the difference had narrowed to a 15-point difference, although the level was lower in both poles compared to the early period. However, in the second half of the year, the difference had widened from 20 points in the first half to 30 points in the second half, when compared to the estimated levels five years after approval in the U.S. Thus, in Japan in particular, delays in approval and declines in approval rates occurred in the second half of the period compared to the first half, indicating that the risk of a drug lag is greater than in Europe.

Figure 3 Comparison of approval rates of FDA-approved NMEs in Japan and Europe (logistic curve)
Note: Panel data on trends in cumulative approval rates in Japan and Europe for NMEs approved by the FDA from 2010 to 2021 were generated and logistic regression analysis was performed. This graph is depicted by the estimated logistic curve*2.
Source: Prepared by the Pharmaceuticals and Industrial Policy Institute based on publicly available information from PMDA, FDA, and EMA.

3-3. Number and Percentage of FDA-approved NMEs not yet approved in Japan and Europe over time

Using the data set introduced in the previous two sections ( Figure 2), we compiled the total number of US-approved NMEs from the previous period (2010-2015) to the latter period (2016-2021) by 6-year period, as well as the number of unapproved drugs in Japan and Europe, respectively. In addition, the ratio of the number of unapproved drugs in Japan and Europe to the number of approved NMEs in the U.S. was calculated to track changes over time ( Figure 4 ).

The results show that the number of unapproved drugs in Japan was larger than that in Europe, and the ratio of unapproved drugs was more than 20 percentage points higher in all surveyed years. In detail, in both Japan and Europe, the percentage of unapproved drugs showed an increasing trend from the earlier period (2010-2015) to the later period (2016-2021) of the surveyed years, with 66% of the number of US NMEs in 2016-2021 being unapproved drugs in Japan and 42% unapproved drugs in Europe. The number of U.S. NMEs themselves also increased during this period, so that in the previous period (2010-2015) there were 123 domestically unapproved drugs and 59 European unapproved drugs, while in the latter period (2016-2021) there were 183 domestically unapproved drugs and 116 European unapproved drugs.

Figure 4: Annual changes in the number and percentage of unapproved drugs in Japan and Europe in FDA-approved NMEs
Note 1: The time of the survey is as of the last year-end of the subject year. For example, if the target year is 2016-2021, the number of NMEs approved in the U.S. in 2016-2021
For example, if the target year is 2016-2021, the number of unapproved NMEs approved in the U.S. from 2016 to 2021 is calculated based on the information on the approvals in Japan and Europe as of the end of December 2021.
Note 2: Percentage of unapproved drugs = number of unapproved drugs (at the time of the survey) / number of US-approved NMEs
Source: Prepared by the Pharmaceuticals and Industrial Policy Institute based on publicly available information from PMDA, FDA, and EMA.

Comparison of Emerging Businesses (EBPs) and Pharmaceutical Companies (Pharma)

4-1. comparison of approval status of EBP and Pharma items in Japan and Europe

We will now compare the status of unapproved drugs in Japan and Europe for EBP and Pharma items. First, we surveyed 481 NMEs approved by the FDA from 2010 to 2021, the classification of companies applying for approval, and the approval status of EBP and Pharma items in Japan and Europe as of the end of 2021 ( Figure 5 ).

The companies applying for approval of the 481 FDA-approved NMEs were classified into the three categories of EBP, Pharma, and Academia/NPO. 176 (37%) were EBP items, 300 (62%) were Pharma items, and 5 (1%) were Academia/NPO items.

Next, looking at the approval status of 176 EBP items and 300 Pharma items in Japan and Europe, more than 60% of both EBP and Pharma items were approved in Europe, with 73% (220 items) of Pharma items in particular, and 60% (105 items) of EBP items. EBP items accounted for 60% (105 items). On the other hand, in Japan, although more than half of the Pharma products were approved, the approval rate was 59% (178 products), 14 percentage points lower than in Europe, and for EBP products, the number of approved products was 50 (28%) and the number of unapproved products was 126 (72%), approximately 2.5 times higher than the number approved. This is 32 percentage points lower than the approval rate in Europe. Thus, the difference in approval rates between Japan and Europe, especially for EBP items, was significantly larger, and there was also a difference for Pharma items.

Fig. 5 Company classification of FDA-approved NMEs and their approval status in Japan and Europe (as of December 31, 2021)
Note: The right figure shows the approval status in Europe and Japan for U.S.-approved NMEs based on the company classification in the left figure; Academia and NPOs are excluded from the total.
Source: Created by the Pharmaceutical Industry Policy Institute based on publicly available information from PMDA, FDA, EMA, and Evaluate Pharma.

4-2 Comparison of unapproved status of EBP and Pharma products in Japan

Based on the approval status of EBP and Pharma items in Japan shown in the previous section, we investigated the domestic development status of unapproved drugs ( Figure 6 ). Of the 176 drugs for which EBPs have applied for approval in the U.S., 126 are unapproved in Japan. Looking at the domestic development status as of the end of 2021, 40 (32%) are under development in Japan, and for the remaining 86 (68%), no information on domestic development is currently available. Among them, 75 items (59%) had no development information. On the other hand, for the 122 Pharma products, 43 (35%) were under domestic development, a similar percentage to that of EBP, and for the remaining 79 (65%), there was no information on domestic development in progress, of which 57 (47%) had no domestic development information.

Next, we examined the information on special regulatory measures*13 at the time of FDA approval for EBP and Pharma items approved by the FDA for which no domestic development information was available ( Figure 6, lower panel ). The percentage of all the items designated as special measures was lower than that of the 481 FDA-approved NMEs, indicating that a high percentage of these items with special measures were developed in Japan. On the other hand, the percentage of EBPs was up 6 percentage points (64%) compared to the percentage of FDA-approved NME 481, which are designated for Priority Review*14 that designates new drugs with clinical results showing a significant improvement in efficacy or safety, and the percentage of EBPs developed for diseases that in principle affect fewer than 200,000 patients in the U.S. Orphan, which designates new drugs developed for diseases with fewer than 200,000 patients in the U.S., is up 3 points (48%), and Fast Track, which designates new drugs that meet unmet needs for serious diseases, have no existing drugs, or have the potential to exceed existing therapies, is up 8 points (44%). Breakthrough Therapy, which is designated as a potential breakthrough drug that may lead to more substantive innovation than Fast Track, is up 1 point (24%) and is expected to meet unmet needs based on surrogate/intermediate endpoint results for serious diseases. The percentage of all items with special measure designation except for Accelerated Approval was up 3 points (12%), while the percentage of items with special measure designation was up 1 point (24%) for Breakthrough Therapy, which is approved quickly for serious diseases to meet unmet needs based on surrogate/intermediate endpoint results and to speed up patient access. In other words, the results indicate that many of the EBPs that remain undeveloped in Japan are those that have received these special measure designations.

Figure 6: Breakdown of FDA-approved NMEs not approved in Japan: Comparison of EBP and Pharma
Note 1: Information on domestic development status is as of the end of December 2021 survey, and is based on "Tomorrow's New Drugs (Technomic Production)".
Note 2: Percentages of special regulatory action designation for the 481 FDA-approved NMEs are as follows.
Priority Review 58%, Orphan 45%, Fast Track 36%, Breakthrough Therapy 23%, and Accelerated Approval 15%.
Source: Created by the Pharmaceutical Industry Policy Institute based on public information from PMDA and FDA, Evaluate Pharma, and New Drugs for Tomorrow.

5. summary and discussion

The following section discusses the results obtained from this survey. A comparison of the status of unapproved drugs in Japan and Europe shows that the approval rate in Japan is lower and the number and percentage of unapproved drugs is higher than in Europe, as shown in Figures 1 and 2. However, since the data in Figure 1 is a snapshot as of the end of 2021, we simultaneously investigated and analyzed the statistical methods and changes in the number of unapproved drugs over time based on the data set in Figure 2. Although the order is back and forth, Figure 4, which tracks the annual changes in the number of unapproved drugs in Japan and Europe, shows that the percentage of unapproved drugs in Japan is always more than 20 percentage points higher than in Europe, while the number of unapproved drugs is increasing in both Japan and Europe, coupled with an increase in the number of US-approved NMEs.

Estimates based on the logistic curve shown in Figure 3 indicate that the rate at which US-approved NMEs are approved is slower in Japan than in Europe, and the estimated final approval rate is also lower. While Europe almost reaches the final approval rate level within one to three years after US approval, Japan's approval rate is expected to increase slowly with each passing year due to the larger approval delay with the US than with Europe. Regarding approval delays, the PMDA's latest drug-lag estimate*15 publicizes that items approved in Japan have a median approval delay of about six months from the U.S. According to a paper by Hiroshi Nakamura, a professor at Keio University, and his colleagues*16 published in 2022, the number of new validated drugs approved in Japan from 2008 to 2018 According to a paper*16 by Professor Hiroshi Nakamura et al. of Keio University published in 2022, looking at the overall distribution of development lag from the U.S. for drugs containing new active ingredients approved in Japan from 2008 to 2018, the development lag in Japan relative to the U.S. has not decreased, and in recent years nearly 40% of all drugs have a development lag of 3 years or more relative to the U.S. We believe that the late approval of drugs with such a large development lag is one of the reasons for the slow approval speed of US-approved NMEs in Japan.

In addition, the difference in the final approval rate level between Japan and Europe shown in Figure 3 represents an estimate of the percentage of drugs that are considered clinically necessary and approved at least in the U.S. and Europe, but that have not entered the Japanese market despite waiting. According to this estimate, the difference in the level of final approval rates between Japan and Europe in the latter half of the survey period (2016-2021) compared to the previous period (2010-2015) is widening, and should be monitored closely in the future. In addition, the difference in the initial approval rate level between Japan and Europe narrowed in the second half of the period compared to the previous period, but this is largely due to the impact of the lower initial approval rate in Europe in the second half of the period. In Europe, in the first half of the 2010s, many products were approved in Europe first or in the same year as in the U.S. In recent years, however, the number of products approved in the U.S. first has been increasing*17. 17 The reasons for this are not clear, but the size of the U.S. market relative to Europe and the incentives for innovation may have made the U.S. market more attractive and led to a preference for the U.S. market.

Figure 5 shows the approval status of EBP and Pharma products in Japan and Europe, and indicates that the approval rate is lower for EBP products than for Pharma products in both Europe and Japan. However, while the approval rate for both EBP and Pharma in Europe exceeded 60%, the rate in Japan was significantly lower at 28% for EBP items, although Pharma items were approved at around 60%. As analyzed by Iida et al. in Policy Research Institute News No. 66*6, one of the reasons for this may be the low rate of inclusion of Japan in international joint clinical trials conducted as pivotal trials for products of emerging companies. The number of international clinical trials*8 and the status of pivotal trials*6 in emerging companies' products in the top five European ethical drug sales countries (Germany, France, Italy, the U.K., and Spain)*7 by country shows that the five European countries, like the U.S., are always in the top position, which is a significant difference from Japan. The reasons for this are the clinical trial environment in Japan, the pharmaceutical affairs system, and the low expected business value of Japanese expansion*6. We look forward to future policy responses to this issue.

Figure 6 compares the status of unapproved drugs in Japan for EBP and Pharma items. Among EBP items, a higher percentage of unapproved drugs for which there is no domestic development information are those that have received special regulatory designation in the US. In other words, the survey confirmed once again that a large number of clinically important drugs may be included and that the increase in the number of unapproved drugs poses a challenge for access to new drugs in Japan*5.

6. conclusion

In this study, we compared the status of unapproved drugs in Japan and Europe based on NMEs approved in the U.S. from 2010 to 2021. The results showed that the approval speed of new drugs approved in the U.S. was slower in Japan than in Europe, and the estimated final approval rate was also lower, and worse in the latter period (2016-2021). One factor is that the approval rate of EBP items in Japan is notably lower than in Europe, and with the growing presence of EBPs in US-approved NMEs, there are concerns about the future impact on access to newer drugs.

Japan's pharmaceutical market is the only one among the 10 leading countries in the world that is expected to experience negative growth, and IQVIA forecasts that Japan will be overtaken by Germany in 2026, falling back to fourth place in the world*18. Foreign start-ups, who are thinking about how to obtain approval and access to patients as quickly as possible and how to monetize their products in the U.S., the largest market, are not interested in Japan, especially in the early stages of development, and are putting Japan on the back burner. Under such circumstances, what happens when they get information about Japan's shrinking market size in the global pharmaceutical market? We believe that this will accelerate the decline in Japan's attractiveness as an investment destination, and that there is a possibility that the number of unapproved drugs in Japan will increase even more than now, accelerating the drug lag.

All pharmaceutical companies, including start-ups, conduct their business activities based on the philosophy of contributing to patients and to the world. However, it is clear that they cannot invest in R&D for drugs that have low expected business value, that they cannot recoup their investment, or that they cannot predict when they will be able to recoup their investment, unless there is some incentive to do so. In order for the world to recognize Japan as a good investment destination, what must Japan improve, and in what areas will Japan appeal to the world in the future? As the awareness that drug lag is a problem directly linked to the disadvantage of the people in terms of delayed access to medicines is spreading, we need to seriously consider this issue. We sincerely hope that the multiple evidences*2-6, 17, and 19 presented by the Policy Research Institute will help to solve this problem.

( Masao Yoshida, Senior Researcher, Pharmaceutical and Industrial Policy Research Institute)

Back to Newsletter Top

TOP