U.S. drug regulators would be able to label such treatments "breakthrough" therapies, and work with companies to speed up clinical trials, for example by testing the drugs for a shorter time or enrolling fewer patients.

The U.S. Food and Drug Administration has said it supports the proposal, which is included in both versions of an FDA "must-pass" funding bill currently working its way through Congress and set to be passed by the end of the summer.

The plan fits with President Barack Obama's aim to foster innovation as a means of spurring job creation, and may pacify some critics who say the FDA lags European countries in approving new medicines or medical devices.

Dr. Janet Woodcock, head of the FDA's drugs center, has said the FDA needs more flexibility to bypass "business as usual" when it sees unexpected effects, or when a new medicine can greatly help patients.

"What happens when you have a breakthrough drug that shows an effect that's never been seen before?" she told reporters in March, discussing the proposal.

"If we'd done business as usual during the AIDS epidemic, we would have never controlled that epidemic," Woodcock said.

During a spike in new cases of AIDS in the early 1990s, the FDA created an "accelerated approval" process to get new AIDS drugs to the market more quickly by allowing companies to show indirect measures of how the drug helped people.

Jeff Allen, executive director of Friends of Cancer Research, said the time was right for another avenue to speed innovative treatments to patients.

Allen said new understanding of human biology and of diseases meant companies could create more effective drugs, but with fewer side effects, because they would be more targeted to specific patients or disease types.

He said a good example was Roche Holding AG's skin cancer drug Zelboraf, approved last year; people taking the pill were 63 percent less likely to die from melanoma than people on standard chemotherapy.

There was also Pfizer Inc's targeted lung cancer drug Xalkori, which could shrink or eliminate tumors in 10 to 12 months for people with a specific genetic mutation.

"The most promising drugs show an effect early," Allen said. "(But) there's a mentality among drug developers or FDA reviewers that you have to go through this multi-step approach" to get a drug to market.

"We're hoping to encourage getting away from that," he said.

Allen said the FDA would retain its power to require companies to do post-approval studies, or withdraw drugs from the market if initial evidence of benefit was not shown in follow-up trials.

(Reporting by Anna Yukhananov)

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