Year-to-year variation in drug approvals is driven by “addition-to-class” agents, reports the US Food and Drug Administration (FDA).

The lowdown: Annual approval numbers provide a quick and easy gauge of the health of the biotech and pharmaceutical industry, with year-to-year variations leading to hand-wringing or excitement. But like all top-line data, these numbers don't tell the full story. To better measure industry's ability to innovate, the FDA took a closer look at the new molecular entity (NME) approval rates and found we may be making much ado about stability. “The number of first-in-class drugs remained remarkably stable over 25 years, with an average of roughly eight new first-in-class drugs per year,” wrote the FDA's Janet Woodcock and her colleagues (Health Affairs 32, 1433–1439; 2013).

To get to these numbers, Woodcock and her colleagues classified each of 645 NME approvals made between 1987 and 2011 as “first-in-class”, “advance-in-class” (defined as a non-first-in-class product that receives a priority review designation) or “addition-to-class”. When they plotted the results by year, they found that much of the variation in approval rate — including a surge in the mid-1990s — can be traced back to the fortunes of addition-to-class products.

The authors also found some cause for optimism, noting that first-in-class drugs made up 39% of the total approvals during 2002 to 2011, up from 27% of the total in the preceding 15 years.

Large pharmaceutical companies (defined as the top 25 companies based on US sales revenues in the respective year) generated 55% of the NMEs, and small companies generated the rest. Yet, despite producing fewer NMEs, small companies accounted for 53% of the first-in-class agents and only 40% of the addition-to-class agents.

Although the findings of stability are encouraging, the authors note that maintenance of the status quo may not be enough to sustain the industry. Indeed, research and development (R&D) efficiency, as measured by how many new drugs are brought to market per billion US dollars in R&D spend, has been falling steadily (Nature Rev. Drug Discov. 11, 191–200; 2012). As various initiatives are being implemented to slow the efficiency decline, better measures of industry's track record — including sophisticated analysis of NME approvals — should help us track whether progress is being made, the authors conclude.