Topics Drug lag: Why are unapproved drugs increasing?

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Shinichiro Iida, Senior Researcher, Pharmaceuticals and Industrial Policy Research Institute
Tomoyuki Shibuguchi, Former Senior Researcher, Pharmaceuticals and Industrial Policy Research Institute
Masao Yoshida, Senior Researcher, Pharmaceuticals and Industrial Policy Research Institute

SUMMARY

1. Introduction

The "increase in unapproved drugs" is a serious issue for access to the latest medicines in Japan, and efforts to eliminate it are needed. Recently, the number of unapproved drugs and the ratio of unapproved drugs have been increasing in the late 2010s, as revealed in the Policy Research Institute News No. 63 (July 2021) ^{1) and a} survey by the National Cancer ^{Center2) ,} and the reality is that many of these products are from emerging biopharmaceutical companies without Japanese subsidiaries or domestic managers, and it has been suggested that many of them have not been developed in Japan. The fact is that many of these products have not yet been developed in Japan. In a previous ^report3), it was confirmed that many of these unapproved drugs are drugs of high clinical importance, and the increase in the number of unapproved drugs is an issue that cannot be overlooked for access to the latest drugs in Japan, and the causes and countermeasures need to be examined.

According to ^IQVIA4), the number of products approved by the FDA as Novel Active Substances that have been launched by emerging biopharmaceutical companies has been increasing every year, reaching 40% by 2020. For background information on the status of new drug approvals by the FDA, please refer to the next ^report5).

In this report, we will focus on FDA-approved drugs (new active ingredients) for antineoplastic agents and neurological agents from 2011 to 2020 in order to investigate the background of the increase in unapproved drugs in the late 2010s as well as the factors behind this increase.

2. research methods

The unapproved drugs in Japan were identified in the same way as in Policy Research Institute News No. 63 (July 2021) ¹⁾. The FDA-approved drugs (2011-2020) in the disease areas with a large number of unapproved ^drugs3) were included in the analysis in this paper: antineoplastics (104 drugs) and neurological agents (32 drugs). Drugs (excluding diagnostics) listed in the Center for Drug Evaluating Research's (CDER) "New Molecular Entity (NME) Drugs & Original BLA Calendar Year Approvals" were included. The classification of drug efficacy was based on The Anatomical Therapeutic Chemical code of each item, referring to the WHO ^website6). The data are presented in Table 1. The number of products not approved in Japan as of the end of 2015 and 2020, respectively, were compared. The items that had not been approved in Japan as of the end of 2015 and 2020, respectively, were defined as unapproved drugs.

Pivotal trials at the time of FDA approval were identified from the clinical section of Prescribing Information, and clinical trial information, including the countries participating in the trials, was obtained from ClinicalTrials.gov. ^{7, 8)}

For company classification, the year of establishment of the company was investigated by Evaluate Pharma, and start-ups were defined as those established after 1990. Non-emerging firms were considered to be pharmaceutical firms. The domestic development trends of emerging companies' products are reviewed in Tomorrow's New Drugs.

The impact on the increase of unapproved drugs was estimated by logistic regression analysis using the statistical analysis software Stata/IC 14.0 for Windows (Stata Corp LP, College Station, TX, USA), and robustness was confirmed with a linear model using the least squares method.

3. analysis results

3-1. unapproved anti-cancer drugs

The current status of unapproved drugs was identified for antineoplastic drugs approved by the FDA in 2011-2015 (first semester) and 2016-2020 (second semester) (44 and 60 drugs, respectively) (Figure 1). Of the items in the first and second semesters, there were 27 and 41 unapproved drugs in Japan, respectively. The number of unapproved drugs increased and the percentage of unapproved drugs also increased from 61% to 68%. The increase was similar to the increase in the number of unapproved new drugs in Europe and the U.S. ¹⁾.

For the latter category of products, we examined the percentage of companies that had filed an FDA application, classifying them according to whether or not they were approved in Japan at the end of 2020 (Figure 2). Of the 19 items approved in Japan, 16 items (84%) were handled by pharmaceutical companies. On the other hand, among the 41 drugs that were not approved in Japan, 22 (54%) were from startup companies. The higher proportion of unapproved anti-cancer drugs in the late stage of development by emerging companies was suggested to be associated with an increase in the number of unapproved drugs.

3-2. Breakdown of Unapproved Antineoplastic Drugs in Japan

The number of items and ratio of unapproved drugs in Japan for anti-cancer agents increased in the late stage. FDA-approved drugs in the same period, the characteristics of the companies that submitted applications and pivotal trials ^changed5). In order to understand the factors behind the increase in the number of unapproved drugs, we investigated the relationship between the number of FDA-applied companies and pivotal trials in the increase in the number of unapproved drugs.

-The number of unapproved drugs by emerging firms is increasing significantly.

Figure 3 shows the change in the number of unapproved drugs by applicant company from the previous period to the second period. There was no significant change in the number of both approved and unapproved drugs in the pharmaceutical company category from the previous period to the second period, while the number of unapproved drugs in Japan decreased slightly from 21 to 19. Among items from emerging companies, there was a slight increase in the number of approved drugs, while the number of unapproved drugs in Japan increased markedly from 6 to 22 from the previous period to the second half of the year.

-Incorporation of Japanese regions into pivotal trials is increasing, but the number of unapproved drugs incorporated into Japanese regions is low.

In order for a drug to be approved in Japan without lagging behind its overseas counterparts, it is important that the pivotal trial at the time of overseas approval is an international collaborative trial and that the Japanese region is incorporated into that trial. Figure 4 shows the status of incorporation of the Japanese region in pivotal trials.

For FDA-approved anti-cancer drugs, many pivotal studies are international collaborative trials. In the first half, 43 (98%) and in the second half, 53 (88%) of the pivotal trials were international collaborations. In the second half, although the number of products increased, the number of single-country trials in the U.S. increased, and the ratio of international joint trials decreased.

Although the ratio of FDA-approved products in international clinical trials declined, the number of pivotal trials that incorporated the Japan region increased both in terms of the number of products and the rate of inclusion, from 11 (25%) in the first half to 21 (35%) in the second half.

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 Clinical Trials" (2007, MHLW) and there were efforts by pharmaceutical companies to incorporate Japanese regions into global clinical trials ^{(7, 8)}, and both the number of products and percentage of products incorporated increased.

However, the number of FDA-approved drugs in pivotal trials without Japanese incorporation remained high at 39 (65%), excluding 21 drugs, raising concerns about the possibility of a development lag or unapproved drugs (Figure 4).

Since the number of unapproved drugs in Japan is increasing despite the increasing rate of inclusion in global clinical trials, we checked the status of inclusion of anti-cancer drugs in global clinical trials in each country and analyzed the differences between approved and unapproved drugs (Figs. 5 and 6).

Looking at the changes between the first and second terms of the Japanese-approved drugs, the number of Japanese-included drugs doubled from 7 to 15, while the number of non-included drugs decreased from 10 to 4. The number of approved drugs incorporated into international clinical trials in Japan has been increasing.

On the other hand, the number of unapproved drugs incorporated in Japan increased from 4 to 6, while the number of unincorporated drugs increased markedly from 23 to 35. In the late-stage unapproved drugs, the ratio of no incorporation reached as high as 85% (35/41 items) (Figure 10).

While the overall incorporation rate in the latter period was 35% (Fig. 4), the approval rate was only 32% (Fig. 1). The low approval rate can be attributed to the fact that the total number of approved drugs did not double, although the number of Japanese-approved drugs doubled. Looking at the six drugs that were incorporated in Japan but not yet approved, four were approved by the end of 2021, indicating that there were delays in the approval of some of the drugs incorporated in the latter half of the year. The delays may have been caused by a change in the Japanese developer of the emerging company's product, or by additional studies being conducted in Japan due to the early pivotal phase of the study.

Figure 6 shows the status of incorporation of each country for 60 items for 2016-2020. Of the 19 drugs approved in Japan, 18 are in international joint clinical trials, and the number of Japanese drugs included (15) is the same as that of the G7 countries. Many of the products were also included in South Korea (13 products) and Taiwan (10 products), indicating that international joint clinical trials are being promoted in Asian countries as well.

Of the 41 drugs not approved in Japan, 34 were in international joint trials and 6 were in single-country trials. Looking at the number of countries (including single-country studies) in which these products were incorporated, approximately 30 products were incorporated in the G7 countries excluding Japan, while only 6 products were incorporated in Japan. In Asia, Korea (16 products) and Taiwan (11 products) were included, and Japan was clearly less included than these regions. The smaller populations and smaller pharmaceutical markets of South Korea and Taiwan suggest that the regulatory and clinical trial environment in the Japan region differs from these countries.

In terms of emerging companies, 19 of the 21 unapproved drugs were in international clinical trials. The countries in which they were conducted were similar to the overall trend for unapproved drugs. The U.S. was included in all of them, and about 15 products were included in major European countries, while only 3 products were included in Japan. In Asia, South Korea (8 products) had the largest number of products, followed by Singapore, Taiwan, China, and Hong Kong, and Japan had the sixth largest number of products.

-In unapproved drugs, the number of products in early pivotal phase is increasing.

In the late stage of FDA-approved products, there was an increase in the number of products for which Phase 1/2 or Phase 1 was a pivotal ^study5). The percentage of each clinical trial phase in late-stage Japanese unapproved drugs is shown in Fig. 7 for this effect. Of the 19 drugs approved in Japan, 11 (58%) were in Phase 3 pivotal studies conducted by the FDA, 6 (32%) in Phase 2 studies, and Phase 1/2 studies were also identified in 2 drugs. The percentage of early clinical trial phases (Phase 1/2 and Phase 1) was higher than that of approved drugs (24%), with eight Phase 1/2 drugs in addition to two Phase 1 drugs. The percentage of unapproved drugs was lower at 13 items (32%).

Among unapproved drugs, 68% (28/41) were in early phase clinical trials, including Phase 2, compared to 42% (8/19) for approved drugs.

Looking at the transition from the previous period to the late period (Figure 8), while the number of unapproved drugs in Phase 3 remained unchanged at 13 items, the number of unapproved drugs in Phase 2 (13 to 18 items) and Phase 1/2 (1 to 8 items) increased. Two Phase 1 items were also observed in the latter period. Among approved drugs, Phase 2 and Phase 1/2 drugs increased to 6 and 2 items, respectively, while Phase 3 drugs (11 items) decreased.

Looking at unapproved drugs in terms of the change from early to late phase, divided into late clinical phase (Phase 3) and early clinical phase (Phase 2, Phase 1/2, and Phase 1), there was no change from 13 drugs in the late phase, while the early phase doubled from 14 to 28 drugs.

The changes in clinical trial phases for unapproved drugs were divided into startups and pharmaceutical companies (Figure 9).

Comparing the number of unapproved drugs in the early and late phases, an increase of 16 items from 6 to 22 was observed for the emerging companies. Phase 22 was the most common pivotal phase in the late phase, with an increase to 11 items, while Phase 1/2 and Phase 1 showed an increase of 6 items and early clinical trial phases. Many unapproved drugs were in clinical phases earlier than Phase 2 for a total of 17 drugs (77%). There was no significant change in the number of both approved and unapproved drugs in the pharmaceutical companies, but there was an increase in unapproved drugs in Phase1/2. The proportion of early-stage clinical phases increased to 58% (11 products in total).

-Low incorporation of emerging companies and early-stage clinical trials in Japan

It has become clear that emerging companies, early clinical phases, and low rates of incorporation are factors contributing to the increase in unapproved drugs. To explore the relationship between these factors, the status of incorporation into pivotal trials was divided into company categories and clinical phases (Figure 10).

The number of items and incorporation rate of pharmaceutical companies increased from 10 items (28%) in the previous period to 15 items (43%) in the latter period. The number of new companies also increased from 1 (13%) in the previous period to 6 (24%) in the second period, but the incorporation rate was lower than that of the pharmaceutical companies.

In Phase 3, the number and percentage of pharmaceutical companies increased from 7 (29%) to 9 (56%), and in Phase 2, the number increased from 2 to 5. On the other hand, only one product was included in Phase 1/2 in the late phase. The incorporation rate for early clinical phases (Phases 1, 1/2, and 2) increased from 25% (in the earlier phase) to 32% (in the later phase), but was lower than in the later clinical phases.

Incorporation into Phase 3 at startups increased from 1 (33%) in the previous period to 3 (38%) in the late phase; 2 in Phase 2, 1 in Phase 1/2, and 0 in Phase 1 were less common. The incorporation rate of early clinical trial phases (Phase1, 1/2. 2) in the late phase increased to 18% compared to the previous period, but was lower than that of the late clinical phases and the early clinical phases of the pharmaceutical companies.

Although the Japanese incorporation rate into pivotal trials increased in the earlier and later phases, the Japanese region's incorporation rate was lower in the later phases for startup company items and early clinical trial phases.

In addition, a reduction in the size of pivotal trials was observed for FDA-approved ^drugs5). Looking at the relationship with the incorporation of the Japanese region, it was shown that the incorporation rate into trials of 300 cases or less was low in the late phase, at 20% (3/15 items) for items from pharmaceutical companies and 8% (1/11 items) for items from emerging companies (Figure 11). Although the inclusion rates for studies with fewer than 300 cases were low in the previous period as well (11% and 0%, respectively), it is not difficult to imagine that the large number of small studies and the high ratio of small studies in the second period may have influenced the low inclusion rate in Japan.

The number and ratio of personalized medicine items in FDA-approved items increased from the previous period to the later ^period5), but a comparison of personalized medicine items in Japan-approved and unapproved did not show any significant difference (data omitted).

-The impact on the increase in the number of unapproved drugs is greater in the "no incorporation of Japan region" category.

The increase in the number of unapproved drugs in the second half of the year was attributed to the following factors: 1) an increase in the number of items from emerging companies, 2) an earlier pivotal phase, and 3) a lower rate of Japanese inclusion in the pivotal phase. For each of these factors, the impact on the increase in unapproved drugs was estimated using statistical methods (Table 1).

Logistic regression analysis (Appendix Table 1) using data for 104 products showed statistically significant differences in the three influencing factors: "Emerging company products" was significant with a P value of 0.044, "Early pivotal trial phase" was significant with a P value of 0.049, and "No Japanese regional incorporation" was significant with a P value of 0.000.

Based on the respective odds ratios, the odds ratio of an unapproved drug was estimated to be 8.9 times higher when the Japanese region was not incorporated than when it was incorporated. The odds ratio of an unapproved drug was 3.5 times higher for an emerging company item than for a pharmaceutical company item, and the odds ratio was 2.8 times higher for Phase 2 or less of the pivotal trial phase than for Phase 3. Since odds ratios away from 1 can be interpreted as a more pronounced difference between the two groups being compared, the lower rate of Japanese inclusion in the pivotal study phase was considered to be a major factor contributing to the increase in the number of unapproved drugs.

To check the robustness of the analysis, we also performed estimation using a linear probability model with the least squares method. The results showed that the "Emerging Company Item" was significant with a P-value of 0.039, the "Early Pivotal Testing Phase" was significant with a P-value of 0.056, and "No Japan Region Incorporation" was significant with a P-value of 0.000, all of which were found to be statistically significant.

Comparing the marginal effects of each, it was found that the probability of an unapproved drug was 44% higher when the Japan region was not incorporated than when it was incorporated, and the effect on the probability of an unapproved drug was the highest among the three factors evaluated. Marginal effects were also estimated at 18% and 17% for emerging company items and early pivotal trial phases.

Based on the results of the above statistical analysis, the impact of the lack of Japanese incorporation into pivotal trials was the most significant factor in the increase of unapproved drugs, followed by emerging companies and early pivotal trial phases.

No significance was found for changing macro factors such as timing (pre- and post-period).

3-3. Breakdown of Unapproved Drugs for Nervous System Drugs in Japan

The characteristics and the status of drugs not yet approved in Japan for neurological agents (12 and 30 products) approved by the FDA in 2011-2015 and 2016-2020 are summarized in the same way as for antineoplastic agents (Figure 12)

-The number of unapproved drugs is increasing, and the incorporation rate of Japan is decreasing.

The number of FDA-approved drugs for the nervous system more than doubled, from 12 to 30. The number of unapproved drugs in Japan increased significantly from 9 (73%) to 22 (75%), in proportion to the increase in the number of FDA-approved drugs. Although the percentage of unapproved drugs did not increase, it was high in both the earlier and later periods, exceeding 70%.

The status of Japan's incorporation into the pivotal trials showed an increase in the number of items incorporated, with 3 items (25%) in the first semester and 6 items (20%) in the second semester, but a decline in the incorporation ratio. The incorporation rate was low in both periods.

Looking at the status of pivotal trials, the number of international collaborative trials increased from 10 to 18, but the ratio of international collaborative trials decreased from 83% to 60% due to an increase in single-country trials in the latter half of the period. Note that there were no pivotal trial phases below Phase 1/2, but mainly Phase 3, which accounted for 11 (92%) and 27 (90%), or more than 90% of the total number of products in the first and second phases, ^{respectively5)}.

-The number of unapproved drugs from startups is increasing, and the percentage of Japanese regions included in pivotal trials is low.

Looking at the status of FDA-approved drugs by company (Fig. 13), in the first half, 9 (75%) were from pharmaceutical companies and 3 (90%) were from startup companies, indicating that the majority of drugs were from pharmaceutical companies. In the second half, 10 (33%) were from pharmaceutical companies and 20 (67%) were from start-up companies. In other words, the increase in the number of products in the second half of the year was clearly due to the increase in the number of products from emerging companies, as was the case with anti-cancer drugs.

In the transition of unapproved drugs in Japan from the previous period to the latter period, there was no significant change in the ratio of unapproved drugs, from 7 (78%) to 8 (80%) for pharmaceutical companies and from 2 (67%) to 14 (70%) for startup companies; however, there was a significant increase in the number of items from startup companies.

The change in the incorporation of the Japanese region into pivotal trials from the previous period to the second period was a slight increase from 3 (33%) to 4 (40%) for pharmaceutical companies and from 0 to 2 (10%) for emerging companies. For unapproved drugs in emerging companies, the inclusion of the Japan region in pivotal trials was 10%, but clearly not enough.

For FDA-approved drugs for the nervous system, as in the case of antineoplastics, there was an increase in the number of products from startups in the latter half of the study period. The proportion of drugs not yet approved in Japan did not change between the two periods, but the number of products increased. Many of the pivotal studies of emerging companies' products were conducted in a single country, and as seen in the case of anti-cancer agents, the lack of inclusion of the Japanese region was considered to have a significant impact on the increase in the number of unapproved drugs.

The increase in the number of unapproved drugs for anti-cancer agents and neurological agents is largely due to the influence of startup companies. Therefore, we analyzed the characteristics and business environment of emerging companies in their business.

3-4. Business Characteristics and Environment of Emerging Companies

Twenty-nine startups (33 products) submitted applications to the FDA for anti-tumor agents during 2011-2020, and for the 26 startups for which we were able to obtain company information, we traced the process from their establishment to FDA approval. One company was acquired before listing.

-It took 15 years from establishment to market launch.

Of the 26 companies, 23 (88%) were based in the U.S., while the other 3 were based in Ireland, Germany, and China. The median time from establishment to listing was 4 years and 3 months, from establishment to FDA approval 14 years and 11 months, and even after listing 6 years and 9 months (Figure 14). The median time from establishment to listing was 4 years and 3 months.

-No sales revenues from pre-launch startups.

Since it is possible to imagine that the startups had not yet reached commercialization, we checked drug sales in the year prior to FDA approval and five years prior to FDA approval; of the 26 companies, 17 (65%) had no drug sales in the year prior to FDA approval and 21 (81%) five years prior to FDA approval (Fig. 15).

Three and four of the 26 companies (five years prior and the year before, respectively) had sales of $500 million or more, but these were due to new drugs being launched prior to the new drug under study or to product in-licensing.

It takes about 15 years from the establishment of a company to the launch of a new drug, and most of the companies had no sales revenue prior to approval. These companies do not have ample funds to carry out R&D over a long period of time, and it was recognized once again that external funding is necessary.

-Relative attractiveness of the Japanese pharmaceutical market is low.

For startups that do not have ample funds for R&D, setting R&D investment priorities is a matter of life and death. It is not difficult to imagine that 90% of emerging companies are U.S. companies and that maximizing profits in the U.S. is their first priority. Under such circumstances, they may be considering expanding the number of countries in which they conduct clinical development, based on the balance between R&D efficiency and expected profits from a successful product, or so-called return on investment. In order to analogize how the pharmaceutical market in each country is viewed by U.S. startups, we have plotted the transition of market size relative to the U.S. market (Table 2). The size of the pharmaceutical market in each country or region was indexed to the size of the U.S. pharmaceutical market, with the size of the U.S. pharmaceutical market being 100 for each year.

Comparing Europe, China, and Japan, growth was seen only in China, with a CAGR of 4.7%. The market in Europe and Japan showed negative growth, with a CAGR of -3.1% in Europe and -6.1% in Japan. In terms of size, Europe had more than half (56) of the U.S. market in 2020, while Japan had only 16, or just over one-seventh of the U.S. market.

The results indicate that the Japanese market is small in size and growth potential, and is seen as a negative growth market when compared to the size and growth potential of the U.S. market, which is a foothold for startups. Looking at the trends over the past 10 years, it is difficult to see the Japanese pharmaceutical market as an attractive market, and we surmise that it may not be a priority investment for startups.

Figure 13 shows that the percentage of Japanese companies participating in pivotal trials is low, especially for early stage trials below Phase 2. While this may be reasonable for startups, there is concern that it may pose a significant challenge for access to the latest drugs in Japan.

3-5. Development Trend of Emerging Companies' Products in Japan

Of the antineoplastic and neurological agents approved by the FDA during 2011-2020, 33 (29 companies) and 23 (21 companies) were from startups, respectively. The latest domestic development status (as of the end of April 2022) of these startups was surveyed.

The business structure of these startups varied greatly depending on the time before and after FDA approval. 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. The status of drug development is summarized in these categories (Figure 16).

The trends of 33 anti-tumor drugs (29 companies) were categorized, and 11 M&A drugs (9 companies) were acquired by so-called global pharmaceutical companies, including one Japanese company, 1-2 years after the FDA approval. These products were either approved (9) or in development (3) in Japan.

Nine of the out-licensed products were out-licensed either globally or in the Japan territory. Most of them were out-licensed 1-2 years after FDA approval. Most of the out-licensing partners in the Japan Territory were Japanese companies. These products were also approved (4 products) or in development (5 products), and the percentage of approval was lower than that of M&A.

Among the 13 proprietary products, some of the start-ups with multiple products established Japanese subsidiaries, with two products approved and two in development. However, for many of the products, no information was available (9 products), and there was no indication that the products were under development as of the end of April 2022. The "no information" category includes items that were not listed in the surveyed databases and items for which domestic clinical trials were conducted but no further information was provided or the trials were terminated.

The data also suggested that the negotiation period between companies may also be an approval lag in the development of a business in Japan, since the process of changing business entities, such as M&A or out-licensing, may be involved in the case of an item from a start-up company.

The classification of the 23 neurological agents (21 companies) (Figure 17) shows that, unlike the antineoplastic agents, only one company was involved in M&A. Eleven out-licenses were observed, all of which were either approved or under development. Only one of the 11 drugs was confirmed to be in development in Japan, while the others were classified as in-house (excluding M&As and out-licensing). For the remaining 10 drugs that were not confirmed to be in development, there was no information on clinical development being conducted in Japan.

The development process of neurological agents by startups seemed to be different from that of antineoplastic agents. In other words, many of the drugs were in-licensed from other companies at an early stage of development, and clinical development was conducted mainly in the U.S., rather than being discovered and developed by startup companies. Of the 10 drugs with no information, 5 were in-licensed from other companies prior to FDA approval. Although we were unable to conduct a detailed survey due to limitations in understanding the timing of in-licensing and individual rights, there were two cases of startups that obtained FDA approval in the US but did not have rights to the Japanese territory, and this rights relationship may have influenced the lack of progress in development in Japan.

4. discussion

In exploring the factors contributing to the increase in unapproved drugs in 2016-2020, the most influential factor was the lack of Japanese inclusion in pivotal trials. In particular, the low rate of inclusion of emerging company products in pivotal trials was a major factor, as the number of FDA-approved products by emerging companies increases. In addition, the anti-tumor agents are entering the clinical phase of pivotal trials at an early stage, further raising the hurdle for inclusion in the Japanese region. On the other hand, in the pivotal trials of pharmaceutical companies, the inclusion of Japan in global clinical trials was promoted by each pharmaceutical company, with the inclusion rate reaching 43%, and 56% in Phase 3, showing the success of their efforts.

Why is Japan not included in pivotal trials by emerging companies?

We would like to consider two aspects of investment decisions by emerging companies: R&D and expected business value.

R&D: Regulatory and Clinical Trial Environment

The fact that most of the emerging companies are conducting global clinical trials for their anti-tumor drugs suggests that they have secured a certain scale of development costs. Japan may have a low priority in selecting regions for inclusion. The fact that Korea, Taiwan, Hong Kong, and Singapore were included in many cases suggests that this is not due to geographical Far East reasons. Although the survey did not cover the reasons for Japan's low priority, the number of patients enrolled, the speed of enrollment, and other factors that affect the duration of the trial, the complexity of the procedures for starting the trial (including the preparation of Japanese-language documents), and the cost of clinical trials may make it difficult to select Japan as a region for the trial. In addition, when Japan is included in a global clinical trial, additional clinical trials such as evaluation of tolerability in Japanese patients must be conducted in advance. When Phase 2 is a global clinical trial, it is assumed that Phase 1 will need to be conducted in parallel in Japan while Phase 1 is still underway at the recommended dose, and it is easy to imagine that the scale of implementation will increase and the difficulty of implementation will be high. It is easy to imagine that the scale of implementation would be large and the difficulty of implementation would be high. From the viewpoint of emerging companies, issues related to pharmaceutical affairs and clinical trials in the Japanese region require deeper scrutiny.

Expected business value of Japan expansion

A possible motivation for emerging companies to include Japan in international joint clinical trials may be the case of early business development in the Japanese market. Also, given the current situation in which Japanese companies are developing drugs in Japan through M&A or out-licensing, rather than by themselves, they may want to increase the current value of their products at the time of approval. Most of the emerging companies are U.S. companies, and it is assumed that they expect to earn profits in the U.S., but it is natural for them to want to increase the current value of their products by expanding their business regions to Japan and other countries. However, the relative market size of Japan has shrunk over the last decade, suggesting that it is perceived as a negative growth market. Under these circumstances, it is not difficult to imagine that companies are not motivated to increase their current value by incorporating Japan and expanding into the Japanese territory, and Japan is not a priority in their initial business development.

There is a limit to what can be inferred from publicly available information as to why emerging companies are not incorporating Japan into their pivotal trials, and it may be necessary to conduct interviews with individual companies.

From an economic rationality standpoint, it is difficult to imagine that a single emerging company would invest in building an infrastructure for development, regulatory compliance, sales, distribution, etc. in Japan for a single new drug product. At present, two-thirds of anti-cancer drugs and one-half of neurological drugs are being developed by global companies through M&A or out-licensing to Japanese territories. In other words, securing access to new drugs in Japan will depend largely on the motivation of global mega-pharmaceutical companies that conduct M&A and Japanese domestic pharmaceutical companies that introduce drugs to their territories in Japan.

There have been quite a few cases in which start-up items were already in Japan through M&A or out-licensing 1-2 years after FDA approval, and in those cases, drug losses in Japan were avoided. Since the current situation is that business transactions are made after approval, a development lag of more than 3 years is still occurring, and it is expected that alliances will be promoted from the earlier development stage before pivotal trials. With the number of products from emerging companies said to account for as much as 80% of all products in development, it will be challenging for global and domestic pharmaceutical companies to acquire products and emerging companies with high potential for success and introduce them to the Japanese territory at an early stage, but we expect pharmaceutical companies to continue their efforts to take risks and form alliances at an early stage. We hope that global and domestic pharmaceutical companies that take the risk and form early alliances will continue their efforts.

The business attractiveness of the Japanese pharmaceutical market is also important for global and Japanese companies that form early alliances, and it is no doubt essential for the Japanese market to become highly attractive from the aspect of economic rationality in order to secure access to the latest pharmaceutical products in Japan.

The issue of drug lag, which was addressed before 2010, is considered to have been promoted by pharmaceutical companies to participate in international joint clinical trials in the Japanese region, which has achieved some success. Significant progress has also been made in shortening the review period for regulatory approval. The increase in the number of items from startup companies this time around shows signs of a new drug lag, suggesting that the issue is more complex. The reasons for the lack of inclusion of Japan in pivotal trials by emerging companies, which is the main cause of the increase in unapproved drugs, have not yet been clarified, but in order to eliminate the increase in unapproved drugs, "Japan should be included in international clinical trials of emerging companies' products. The question is, "What can be done to enable Japan to be included in international joint clinical trials of emerging companies' products" or "How can Japanese, European, and U.S. pharmaceutical companies that intend to expand into the Japanese market form alliances early on? Beyond corporate efforts, it will be important to have policies that provide incentives for foreign start-ups to incorporate Japan, as well as policies that ensure profitability for pharmaceutical companies when they develop 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 situation.

On the other hand, when placing the highest priority on access to the latest drugs in Japan, it may be necessary to review regulations, such as allowing approval based on efficacy validation data from overseas without 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 scientific progress so that usefulness can be evaluated without excessive attention to ethnic and environmental factors.

Acknowledgments

I would like to express my sincere gratitude to Professor Junichi Nishimura of Gakushuin University, Faculty of Economics, for his kind guidance and support in the statistical evaluation of the impact on the increase of unapproved drugs. I would like to take this opportunity to express my deepest gratitude.

Appendix Table 1

-Impact on the Increase of Unapproved Drugs - Statistical Analysis Methodology and Results

An item-level logistic regression analysis was conducted using data for 104 items. The explained variable was a dummy variable that took 1 if the drug was unapproved and 0 if it was approved. As explanatory variables, we used a dummy variable that takes 1 if the item is an emerging company item, a dummy variable that takes 1 if the pivotal phase has been accelerated (prior to phase 3), and a dummy variable that takes 1 if the item has not been incorporated into the pivotal phase in Japan. In addition to these factors, a time dummy (a dummy variable that takes 1 if the period is the late 2010s) was included in the estimation model to account for macroeconomic influences such as changes in the clinical development environment around the 2010s.

To check the robustness of the analysis, we also estimated a linear probability model using the least squares method.

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