The FDA provided an update on new drug approvals in 2014, stating that as of December 15, thirty-five new drugs were approved, compared to 27 in 2013.

Here is the high level summary:

1. Fifteen of the 35 drugs were Orphan Drugs, the highest number since the Orphan Drug law was passed in 1983.

2. Fifty-seven percent of the approved drugs had Priority Review tags.

3. Thirty-seven percent of novel drugs were on the Fast Track review route.

4. The agency noted it clocked a shorter median approval time for expedited drugs, at 6.5 months in 2014 compared to 7.9 months in 2013.

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By the end of the year, the FDA website stated 41 new drugs were approved, in 2014, 14 more than in 2013. Here's the rub - 40 percent are for rare diseases, underscoring the industry's focus on specialized products, where competition is limited, development is easier (thanks to the FDA programs, like Breakthrough Therapy Designation), and annual prices often exceed $100,000.

The message to drug developers and patients could not be clearer – the FDA will preferentially look at and approve the “no brainer” applications, those that are intended for small populations, and for which no other therapies exist, no matter how few patients qualify.

This performance reiterates the FDA’s continued fear-based approach to product review and approvals, despite its statements to the contrary and various programs, like the redundant and superfluous Breakthrough Therapy Designation pathway that it continues to tout.

The Agency is very proud of this performance, and because of that, they will not change their point of view or their policies. Problem recognition is the first step to change and reform. No one at the FDA seems to see the problem. Rather, they are celebrating this performance.

With respect to pricing of these niche therapies, drug makers and investors see an irresistible confluence of forces - the FDA making it very easy to develop niche products, Orphan Drug Designations validating that these indications are indeed rare, and the combination of the "Breakthrough" and "rare" labels commanding high prices. Thus, achieving profitability is made much easier.

Interestingly, 316.10(8)(ii) of the Orphan Drug Act states:

"For drugs intended for diseases or conditions affecting 200,000 or more people in the United States, or for a vaccine, diagnostic drug, or preventive drug that would be given to 200,000 or more persons per year, a summary of the sponsor's basis for believing that the disease or condition described in paragraph (b)(6) of this section occurs so infrequently that there is no reasonable expectation that the costs of drug development and marketing will be recovered in future sales of the drug in the United States."

The intent of the Act is to promote the development of therapies for rare diseases by offering 2 additional years of market exclusivity. The rationale, of course, is because the rarity of the disease would render profitable commercialization impossible. That's not what is happening with the new drugs that the FDA is approving for rare diseases - very high prices are making many products for these conditions achieve near blockbuster, if not multi-blockbuster, status.

Take, for example, cystic fibrosis, a condition that affects 30,000 patients in the US and about 1,000 new patients per year - clearly, this is an Orphan indication. Yet, Vertex Pharmaceuticals is a $28.7B company, charging $300,000 per year for Kalydeco, a therapy for just a small subset of CF patients.  

There is an UN-Holy Trinity of FDA fear, which promotes the development of niche products, Orphan Drug designations, which command high reimbursement rates, and investor demands for predictable and steady growth that is turning our drug development companies into niche product developers.  

The Senate is about to add more incentives onto this triad - The Dormant Therapies Designation, which would confer 15 years of exclusivity on new drugs and biologics for which there is "one or more unmet medical need." This is the same language used in Breakthrough Therapy Designation, Fast Track Accelerated Approval, Priority Review, and Orphan Drug. This program would only provide further incentives for the development of niche products at the expense of products that could help many patients. And, it is perfectly consistent with the type of drugs that FDA is preferentially approving, based on fear.

A healthy dose of common sense and perspective is needed to understand the perverse effects of these combined forces. 

The first place to start is the FDA, which needs to get back to promoting health and stop putting labels, like "breakthrough therapy," on products. The FDA needs to do what it is paid to do - review and approve new drugs in a timely fashion.  

Instead of the science and medicine driving the development of new products, FDA policies are doing so. 

And, patients continue to suffer.

Gulfo is the author INNOVATION BREAKDOWN: How the FDA and Wall Street Cripple Medical Advances (Post Hill Press) and CEO of Breakthrough Medical Innovations. He has more than 25 years of experience in the biopharmaceutical and medical device industries and is former CEO of MELA Sciences.