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Few Drugs Gain Approval
To put this frustration into perspective, getting a drug on to pharmacy shelves is actually rare with the ratio of researched drugs gaining FDA approval somewhere between 5,000 and 10,000-to 1. In 2016, only 22 medicines were cleared for sale, the lowest number since 2010 and down from 45 in 2015. Most drug developments fail and those that do make it require passing an approval process that typically spans over a decade and costs nearly $3 billion.
This price tag is so high due in large part to research, development, legal costs and opportunity costs associated with having money tied up indefinitely. Large, complex trials, post-FDA approval trials, analyzing side effects, and researching new dosing methods are also major contributors. Nevertheless, as described above, all those thousands of failed drugs are also culprits. Someone has to pay for their on-going or unsuccessful discovery stage studies, which are not free.
Further, the FDA can be quite moody and fickle when it comes to granting approvals. Although it has a mission statement, the FDA does not execute it homogeneously, which causes regulations to swing from lenient to strict depending on the year. For example, scandals stemming from the drugs Vioxx or Avandia turned the agency into a very careful, safety conscious entity that rejected drug applications, which would have previously been approved due to theoretical safety risks. Yet, when the FDA is criticized for halting progress by being too strict, it becomes more permissive.
The general idea is to weigh the benefits of a drug against possible side effects, but the agency can, and does, modify the rules when it decides a change is required. So, when a drug company thinks it has provided all the data required, the FDA can decide that there need to be more studies or more information to comply with inconsistent standards. This is good news for those whose drugs or devices are already approved. Newcomers and competitors are going to be discouraged from throwing their hats in the ring and will not be eager to spend millions of dollars on a product that is likely to be rejected. But this comes at a cost to innovation which tends to decline with less competition.