FDA Revises Its Approvable/NotApprovable Drug LettersJul 10, 2008 | Parker Waichman LLP
Effective August 11, the Food and Drug Administration (FDA) is changing the format of its “approvable” and “not approvable” letters. The change is being implemented to ease investor concerns. Drug makers whose products are not yet approvable for United States use, will receive “complete response” information from the FDA; when drugs are not cleared, so called “more neutral” letters will be issued.
The FDA’s current approvable/not-approvable letters have been a bit confusing to analysts and investors who were often unsure what signal the FDA was sending about a drug’s forecast. The FDA hopes the new letter format will satisfy critics who have long complained that the FDA is slow to act on drugs and is misleading in its statements about new product uses. “In the past, some drug manufacturers expressed concern that a not-approvable letter sent an unintended message that a marketing application would never be approved, which could adversely affect a company’s ability to raise capital,” the FDA said in a 122-page overview of its new policies.
The FDA’s proposed switch was made four years ago in July 2004. The FDA uses the format medications made through biotechnology. The FDA states the new letters will outline what is missing from the drug application and also, when possible, provide advice on how to correct the application.
FDA letters are not released to the public, so when a company announces it received a letter, investors could infer if a drug did not pass FDA approval. The new letters may actually leave investors less informed, according to Jon LeCroy, a pharmaceutical analyst at Natixis Bleichroeder in New York. “While this new plan may provide more detailed information to the company regarding issues that need to be addressed, investors will likely be kept in the dark on the status of a drug’s approvability,” LeCroy said. “Investors will no longer know whether a drug is dead in the eyes of the FDA,” he added
Ira Loss, who follows the FDA for the firm Washington Analysis, points out that investors are confused with today’s format because the qualifications for an approvable letter have been “distorted by the agency.” Loss added that, “Years ago, an approvable letter meant there were a few things left to resolve. Nowadays, some approvable letters require significant studies.” Loss added, “Now you’re going to have to really rely on the honesty of the management who gets these letters. Everybody is going to have to wait and see what a company says and try to read between the lines.”
By law, brand name drugs makers pay application fees to the FDA in exchange its commitment to act within 180 days. The new rules include standards for “how long review cycles will be extended when companies file amendments to applications or resubmissions.” According to the FDA, revisions may reduce review times for 40 percent of supplementary applications with effectiveness data filed annually; however, review times may increase for 11 percent of these filings and six percent of manufacturing supplements.