The December Effect in FDA Drug Approvals: Assessing the Submissions Echo Hypothesis

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The December Effect in FDA Drug Approvals: Assessing the Submissions Echo Hypothesis

James B. Graham, MBA, SM McKinsey & Company, Boston, Massachusetts Ernst R. Berndt, PhD Massachusetts Institute of Technology, Cambridge, Massachusetts; and National Bureau of Economic Research, Cambridge, Massachusetts

Key Words Prescription Drug User Fee Act (PDUFA); Food and Drug Administration (FDA); Seasonality Correspondence Address Ernst R. Berndt, National Bureau of Economic Research, 1050 Massachusetts Avenue, Cambridge, Massachusetts, 02138. The research reported here is based on James B. Graham’s master’s thesis, which was submitted to the Harvard–MIT Division of Health Sciences and Technology Biomedical Enterprise Program in January 2005.

It has been documented that the Food and Drug Administration’s new drug approvals occur disproportionately in the month of December. We hypothesize that the observed excess December approvals reflects an excess of December New Drug Application (NDA) and Biologics License Application (BLA) submissions. Furthermore, we expect this pattern to have become more pronounced following the passage of the Prescription Drug User Fee Act (PDUFA) in 1992, which set explicit 6- and 12-month review targets. We call this the “December submissions echo” hypothesis. Contrary to our hypothesis, we find the excess December approval phenomenon to be even more pronounced before PDUFA than following it.

INTRODUCTION Food and Drug Administration (FDA) new drug approvals occur disproportionately in the month of December. The Tufts Center for the Study of Drug Development has reported that, of the 107 New Chemical Entity approvals from 1995 to 1997, 29 (27%) occurred in the month of December (1). Seasonal variations are also apparent in New Drug Application (NDA) submissions. A recent study commissioned by the FDA found that from fiscal years 2001 through 2004, the number of fourth-quarter NDA submissions exceeded submissions in other quarters by two to three times (2). The Prescription Drug User Fee Act of 1992 (PDUFA I) set review targets of 6 months for priority applications and 12 months for standard applications (3). On the basis of these targets, FDA approval decisions delivered in accordance with PDUFA guidelines would be expected to lag NDA and Biologics License Application (BLA) submission dates by 6 or 12

Although the monthly pattern for NDA/BLA approvals varied minimally upon enactment of PDUFA, the proportion of NDA/BLA December submissions increased considerably in the post-PDUFA period and has continued to increase recently. As expected, PDUFA review time targets of 6 and 12 months lead to spikes in approvals around these time periods. Although the December excess approval phenomenon has been mitigated recently in response to 10-month-review targets in PDUFA II, the excess December submission phenomenon has persisted since 2001. We consider implications for FDA workloads, first-cycle approvals, industry submission strategies, and user fee policies.

months, assuming that reviews are comp