The dynamics of United States drug approvals are persistent and polycyclic: Insights into economic cycles

Daizadeh, Iraj

It is challenging to elucidate the extrinsic effects of social, economic, policy or other substantive changes on the dynamics of US drug approvals. Here, a novel approach, termed the Chronological Hurst Exponent (CHE), is proposed, which hypothesizes that changes in intrinsic long-range memory latent within the dynamics of time series data may be temporally associated with extrinsic variables. Using the monthly number FDA Center for Drug Evaluation and Research (CDER) approvals from 1939 to 2019 as the data source, it is demonstrated that US approvals are found to have a distinct S-shaped (trichotomized) long-range CHE structure: an 8-year (1939-1947) Stagnated (random; H of 0.5), a 27-year (1947-1974) Emergent (time-varying persistent; H between 0.5 and 0.9), and the 45-year (1974-2019) Saturated (persistent; H of 1) US Approvals Hurst Cycles. Further, dominant periodicities (resolved via wavelet analyses) are identified in the Saturated Period at 17, 8 and 4 years; thus, US Approvals have been following a Juglar/Kuznet mid-term cycle with Kitchin-like bursts. This work suggests that (1) macro-factors in the Emergent Period have led to persistent growth in US approvals enjoyed since 1974, (2) the CHE may be a valued method to explore the constancy of extrinsic pressures on time series data, and (3) adds further evidence that innovation-related economic cycles exist (as supported via the proxy metric of US drug approvals).