Only 22 novel drugs passed muster with the Food and Drug Administration in 2016, a sharp drop off from the near two decade-high of 45 new medicines that received approval the year before. 

The low total, coupled with industry-wide restructuring in R&D, has sparked concerns over the drug development productivity, particularly at large pharmaceutical companies. 

A recent report from Deloitte, for example, estimated the annual return on late-stage pipelines among 12 pharmas at a lackluster 3.7% last year — the lowest level in the past seven years. One of the main drivers of that decline, according to the consultancy, is a failure to successfully refill pipelines with promising assets. With M&A muted compared to several years ago, internal R&D appears to be lagging behind historical standards.

Yet, even as these kinds of structural factors are undoubtedly in play, the explanation for the dip in approvals last year is a bit simpler. 

As it turns out, one of the main culprits behind the decline was an uptick in the number of preliminary rejections issued by the FDA to drug developers. And, unusually, many of these rejections (known as complete responses) were tied to violations of manufacturing standards at the facilities where the drug-to-be-approved was being produced. 

GMP blues

John Jenkins, the exiting head of the FDA's Center of Drug Evaluation and Research noted the rise in complete responses, along with the associated manufacturing issues, in a year-end review of his office's work. 

Fourteen complete response letters were issued last year, a higher total than the past two years combined. 

"In examining the deficiencies cited in the CR letters issued to novel drugs in 2016 it is notable that the primary deficiency for several of the applications was failure to comply with FDA’s current Good Manufacturing Practice (cGMPs) regulations," Jenkins wrote.

This is unusual, according to Jenkins. Among the 47 complete responses issued between 2010 and 2015, only four were tied to cGMP violations. 

This year, however, a much higher number of companies were undermined by failures in their manufacturing supply chain. 

Examples are easy to find. Valeant, already under siege, was bedeviled by manufacturing problems at a third-party supplier for its experimental eye drug Vesneo. While the issue turned out to be resolvable, the complete response letter was yet another setback for a company trying to transform its business model. 

Opko Health, Cempra and Portola all also ran into roadblocks at the FDA over manufacturing issues. While Opko Health was able to resubmit and win approval for its drug Rayaldee (calcifediol), Portola has yet to fully resolve the FDA's concerns with chemistry, manufacturing and controls section of its application. (Cempra just received its complete response last month).

And the manufacturing malaise was not limited just to biotechs, either. Sanofi and Regeneron's application for approval of sarilumab, a drug for rheumatoid arthritis, was rejected in October due to problems at Sanofi's Le Trait facility in France where the drug is filled and finished. 

Stepped-up enforcement

The rise in complete responses tied to GMP violations comes as the FDA has stepped up its enforcement of suppliers and manufacturers in India and China.

India and China account for much of the world's supply of active pharmaceutical ingredients and companies in both countries have moved up the value chain into finished pharmaceutical products. 

Due to their outsized role in the pharmaceutical supply chain, the FDA has been much more active enforcing GMP standards. In 2016, the FDA's Office of Manufacturing Quality issued 44 warning letters to drug manufacturers, 25 of which were sent to companies based in India or China. (Three others were located in Taiwan).

The 44 letters last year were more than double the 20 issued in 2015 and the 19 in 2014. 

While the specific manufacturing issues tied to each manufacturer may vary, the message is clear: the FDA cares about ensuring production processes meet standards.

"2016 may serve as a reminder to sponsors that all of their manufacturing facilities must be in compliance with cGMP regulations if they wish to ensure approval of their application," Jenkins said in his review.