Accelerated Approval Confirmatory Trials Requirement May Further Complicate Life Science Deals

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The Food and Drug Administration's ("FDA") Accelerated Approval pathway has long been a critical mechanism for bringing innovative therapies to patients with serious conditions and unmet medical needs. However, recent legislative changes and evolving FDA guidance surrounding post-approval study requirements could significantly impact deal-making, financing and investment strategies within the life sciences industry. Transactional lawyers navigating this landscape must understand these developments to effectively assess risk and structure deals accordingly.

1. Background on Accelerated Approval of Drugs

Accelerated Approval allows the FDA to approve drugs based on a demonstration of benefit using a surrogate endpoint—a marker reasonably likely to predict clinical benefit—rather than requiring lengthy and costly trials measuring clinical endpoints such as patient survival.1 This is particularly valuable in areas like oncology, where demonstrating a direct impact on survival can take years and require large patient populations.2 For instance, instead of waiting to see if a cancer drug extends a patient's life, the FDA might approve it based on its ability to shrink tumors, a more readily observable surrogate.

The program expedites drug development by shortening clinical trial duration and enabling designs with fewer patients.3 However, because surrogate endpoints are indicative of benefit, not definitive proof, the FDA mandates post-approval studies to confirm the drug's efficacy. These studies are critical in ensuring that the initial promise shown by the surrogate endpoint translates into real-world patient outcomes.

Historically, a significant problem has plagued the Accelerated Approval program: the non-completion of these mandatory post-approval studies. As of 2021, a staggering 38 percent of all accelerated drug approvals (104 out of 278) still had pending completion and review of confirmatory trials.4 Furthermore, 34 percent of those outstanding trials extended past their originally planned completion date. This has led to situations where drugs with unconfirmed clinical benefit remain on the market for years—often referred to as "dangling" approvals.

Compounding this problem were difficulties in patient recruitment (limited incentive for patients to enroll if they already have access to the drug) and, crucially, the FDA's limited ability to compel companies to complete the required studies. While the FDA Amendments Act of 2007 provided some enforcement power through limited fines (up to $1 million),5 this was insufficient. The agency often relied on voluntary withdrawals from sponsors when faced with non-compliance, a slow and often ineffective process.

2. Current Guidance on FDA's Authority for Accelerated Drug Approvals

The Food and Drug Omnibus Reform Act ("FDORA") of 2022 attempted to strengthen the FDA's enforcement of post-marketing studies. FDORA grants the agency enhanced authority, including:

  • Mandatory Timelines: The FDA can now require confirmatory studies to be underway prior to or within a specified timeframe after accelerated approval.
  • Expedited Withdrawals: The FDA can act more swiftly to withdraw approvals if sponsors fail to meet post-marketing study requirements.
  • Regular Reporting: Companies must now provide updates every 180 days on the progress of post-marketing studies, including enrollment targets and milestones.
  • Detailed Study Conditions: The FDA is required to specify detailed conditions for post-approval studies, including enrollment targets, study protocols and completion dates.

Congress directed the FDA to issue guidance on these new authorities by the end of June 2024, addressing key issues such as novel endpoint identification, innovative trial designs, withdrawal procedures and the evaluation of surrogate endpoints.

The FDA responded with two guidance documents that address separate aspects of accelerated approvals. The first, released in December 2024, focused on granting and withdrawing accelerated approvals, providing examples of acceptable surrogate endpoints and emphasizing the need for sponsors to commit sufficient resources to confirmatory trials.6 It also outlined the process for withdrawal, emphasizing preliminary discussions and opportunities for sponsors to address concerns before formal action is taken. However, the formal withdrawal process remains complex and potentially lengthy, with sponsors retaining significant rights to appeal.

The second guidance, released in January 2025, clarified the FDA's definition of "underway" for confirmatory trials, generally requiring trials to be actively enrolling patients prior to approval, with limited exceptions (e.g., an anticipated infectious disease outbreak).7 The guidance established criteria for determining if a trial was "underway," focusing on realistic completion dates, sponsor progress and initiation of trial enrollment. The FDA emphasized that confirmatory trials should also prioritize enrollment of US participants. For rare diseases, the FDA indicated some flexibility, potentially accepting interim analysis of surrogate endpoints as long as the trial is expected to be completed in a timely manner.

3. Stakeholder Reaction and Ongoing Uncertainty

Stakeholder reaction to the guidance has been mixed.8 While there is support for the FDA's efforts to strengthen the program, concerns remain regarding the vagueness of key terms such as "underway" and the subjectivity of establishing target completion dates. Stakeholders noted that exceptions to the enrollment standards could also be more detailed. For rare diseases, the FDA could provide more discussion regarding how specific disease context informs considerations for study design, enrollment and completion timelines. Industry groups like PhRMA and the Association of Accessible Medicines have also called for a consolidated guidance document to ensure clarity and consistency.

Adding to the uncertainty is the lack of clear direction on whether the FDA's enforcement authority will be implemented. It is difficult to predict the direction the new administration will take for accelerated approvals. The current Secretary of Health and Human Services, Robert F. Kenndey Jr., signaled an "evidence-based science" approach while FDA Commissioner Dr. Martin Makary is committed to "gold-standard" science.9 These positions held by leadership could result in heightened enforcement of post-marketing studies. However, the FDA's push for faster drug review and the Trump administration's broader deregulation agenda10 could jeopardize enforcement efforts.

4. Impact on Life Sciences Deals

The increased scrutiny and enforcement surrounding Accelerated Approval will undoubtedly impact deal-making in the life sciences. Oncology products, which account for 83 percent of accelerated approvals between 2012 and 2021, will be particularly affected.11 The pathway is also becoming increasingly relevant for new therapies such as cell and gene therapies, which often target rare diseases with unmet medical need.12

Several scenarios are likely to emerge with dealmaking for drugs with accelerated approval:

  • Chilling Effect: Extreme uncertainty could lead to fewer transactions overall, as parties become hesitant to invest in products with uncertain regulatory futures. However, sophisticated investors may view this as an opportunity to acquire assets at a discount. Robust due diligence can also reduce the risk of regulatory uncertainty.
  • Reduced Valuation: Drugs with Accelerated Approval are likely to see a reduction in valuation due to the increased regulatory risk. Acquiring parties will demand better terms to compensate for this risk.
  • No Significant Change: The framework prior to FDORA already presented challenges for completing post-marketing studies for drugs with accelerated approval. Although legislation gave the FDA additional tools to enforce the Accelerated Approval program, the agency is still limited by a lengthy withdrawal process. However, the new guidance sheds light on this issue and could increase the likelihood of FDA action against non-compliant companies.

Regardless of the ultimate outcome, increased due diligence will be paramount. Parties considering acquiring or financing drug products with Accelerated Approval should focus on:

  • Surrogate Endpoint Validation: Thoroughly assess the validity of the surrogate endpoint used for approval. Is it well-vetted by the FDA?13 Does it logically predict clinical benefit? Evaluating surrogate endpoints may provide the likelihood of success in confirmatory trials.
  • Clinical Trial Design: Evaluate the design of the confirmatory trial. Is it robust and likely to yield meaningful results? Is the sponsor using innovative trial designs? For instance, the FDA would allow innovative trial designs such as a single clinical trial spanning Phase 3 and Phase 4 for accelerated approvals of oncology products.14
  • Enrollment Status: Determine if patient enrollment has started and is progressing according to a realistic timeline. Focus on US-based enrollment, as trials relying solely on foreign recruitment may face increased scrutiny by the FDA.
  • Financial Resources: Assess whether the sponsor has sufficient financial resources to complete the proposed post-marketing study plan.
  • FDA Communications: Review all communications and meetings between the sponsor and the FDA regarding post-approval studies to understand the agency's expectations.
  • Competitive Landscape: Analyze comparator drugs that have received Accelerated Approval. How are their post-marketing studies progressing? A competitor that received Accelerated Approval in a timely fashion could put pressure on the target company to deliver similar results. For instance, if the target drug is behind in its post-approval studies compared to a competitor, the target drug may be at risk of having its accelerated drug approval withdrawn.15 Conversely, if the target drug is first-in-class, with no alternatives, and used to treat serious conditions with unmet medical needs, the FDA may be more flexible with how post-marketing studies are completed.

In conclusion, the evolving landscape of Accelerated Approval demands a heightened level of diligence and a nuanced understanding of the regulatory framework. Transactional lawyers advising clients in the life sciences industry must stay abreast of these developments to navigate the complexities and mitigate the risks associated with this increasingly scrutinized pathway.

 

1 US Food & Drug Administration, Accelerated Approval Program (December 24, 2024), available at https://www.fda.gov/drugs/nda-and-bla-approvals/accelerated-approval-program.
2 Daniel Tobias Michaeli et al., "Special FDA designations for drug development: orphan, fast track, accelerated approval, priority review, and breakthrough therapy," 25 Eur. J. Health Econ. 979, 985 (November 13, 2023), available at
https://doi.org/10.1007/s10198-023-01639-x.
3 US Food & Drug Administration, Accelerated Approval Program (December 24, 2024), available at
https://www.fda.gov/drugs/nda-and-bla-approvals/accelerated-approval-program.
4 US Department of Health and Human Services, Office of Inspector General, OIG Report, No. OEI-01-21-00401, "Delays in Confirmatory Trials for Drug Applications Granted FDA's Accelerated Approval Raise Concerns" (September 29, 2022), available at
https://oig.hhs.gov/documents/evaluation/2622/OEI-01-21-00401-Complete%20Report.pdf.
5 21 USC § 333(f)(4).
6 US Food & Drug Administration, Expedited Program for Serious Conditions — Accelerated Approval of Drugs and Biologics Guidance for Industry (December 5, 2024), available at
https://www.fda.gov/media/184120/download.
7 US Food & Drug Administration, Accelerated Approval and Considerations for Determining Whether a Confirmatory Trial is Underway Guidance for Industry (January 6, 2025), available at
https://www.fda.gov/media/184831/download.
8 Comments on Accelerated Approval and Considerations for Determining Whether a Confirmatory Trial is Underway; Draft Guidance for Industry (March 2025), available at
https://www.regulations.gov/docket/FDA-2024-D-3334/comments.
9 Conor Hale, "Martin Makary outlines AI plans and the broader vision for his term as FDA commissioner," Fierce Biotech (May 15, 2025), available at
https://www.fiercebiotech.com/medtech/makary-outlines-ai-plans-and-broader-vision-his-term-fda-commissioner.
10 See "Unleashing Prosperity Through Deregulation" Executive Order (January 31, 2025), available at
https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-prosperity-through-deregulation/. The "10 for 1" executive order requires agencies to identify at least ten existing regulations for repeal when proposing a new regulation.
11 Ginny Beakes-Read et al., "Analysis of FDA's Accelerated Approval Program Performance December 1992–December 2021," 56 Therapeutic Innovation & Regulatory Science, 698, 699 (July 28, 2022), available at
https://doi.org/10.1007/s43441-022-00430-z.
12 Kylie Stengel et al., "Understanding the History and Use of the Accelerated Approval Pathway," Alvalere Health (January 4, 2022), available at
https://advisory.avalerehealth.com/insights/understanding-the-history-and-use-of-the-accelerated-approval-pathway.
13 For a list of published surrogate endpoints provided by the FDA, see US Food & Drug Administration, Table of Surrogate Endpoints That Were the Basis of Drug Approval or Licensure (December 17, 2024), available at
https://www.fda.gov/drugs/development-resources/table-surrogate-endpoints-were-basis-drug-approval-or-licensure.
14 US Food & Drug Administration, Clinical Trial Considerations to Support Accelerated Approval of Oncology Therapeutics Guidance for Industry (March 2023), available at
https://www.fda.gov/media/166431/download#page=8.
15 Angus Liu, AACR: 'We have to have a level playing field'—FDA oncology chief explains confirmatory trial rejection, Fierce Biotech (April 8, 2024), available at
https://www.fiercebiotech.com/biotech/we-have-have-level-playing-field-fda-oncology-chief-explains-confirmatory-trial-rejection. Regeneron's accelerated approval was withdrawn since competitors (Roche and AbbVie) had superior progress with post-approval studies for products in the same drug class.
 

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