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FDA Drug Approval Process

Medically reviewed by Leigh Ann Anderson, PharmD. Last updated on July 29, 2024.

How do you get a drug to market in the U.S?

FDA approval process

What is the FDA approval process?

The U.S. Food and Drug Administration's (FDA's) Center for Drug Evaluation and Research (CDER) is a science-led organization in charge of overseeing the drug approval process before a drug is marketed.

CDER ensures that both brand and generic drugs work correctly and that the health benefits outweigh the known risks. They review each drug closely using an independent team of clinicians and scientists who evaluate safety, efficacy and labeling of the drug product.

After new drug approval, FDA follow-up continues to make sure new drugs continue to be safe and effective.

The four phases of a drug approval process includes:

The full research, development and approval process can last from 12 to 15 years. What happens during this time period to be sure that the drug you pick up at the pharmacy is safe and effective?

In the manufacturer's early phases of drug discovery (preclinical research) they are synthesizing and screening a drug candidate for toxicity in animals before the medicine moves on to human trials. The sponsor files an Investigational New Drug (IND) Application that details specifics such as chemistry, manufacturing, animal testing and the initial plans for human testing. The IND is reviewed by the FDA to ensure that clinical trials will be safe for humans and that adequate informed consent is included to protect humans subjects.

Human drug studies begin after the IND is reviewed by the FDA and a local institutional review board (IRB). The IRB is a panel of scientists and non-scientists in hospitals and research institutions that oversees clinical research. IRB's determine the specifics of a study protocol, such who should be included in the study, the medications and dosages to be studied and study length and objectives. 

Once a company develops a drug, it undergoes several years of laboratory testing before a New Drug Application (NDA) is made to the FDA to begin testing the drug in humans. Only 1 in 1000 of the compounds that enter laboratory testing will ever make it to human testing.

Once a drug is approved and on the market, Phase 4, which is post-marketing review (after a drug is on the market), takes place to ensure the new medicine remains safe now that it is for public use. Pediatric studies or special safety studies may be completed during this time frame. Phase 4 post-marketing studies and a public safety program called MedWatch helps to monitor side effects after drug approval.

What are the 4 phases of drug approval?

If the FDA gives the green light, the investigational drug will enter several phases of clinical trials and post-marketing approval:

  1. Phase 1: Phase 1 focuses on safety. About 20 to 80 healthy volunteers are recruited to establish a drug's safety and side effects and takes about 1 year. Absorption, metabolism and excretion of the drug are also emphasized.
  2. Phase 2: Phase 2 focuses on effectiveness. Roughly 40 to 300 patient volunteers are used to assess the drug's effectiveness in those with a specific condition or disease. This phase runs about 2 years. Groups of similar patients may receive the actual drug compared to a placebo (inactive pill) or other active drug to determine if the drug is effective. Safety and side effects are also reviewed.
  3. Phase 3: Phase 3 studies begin if evidence of effectiveness is shown in Phase 2. Typically, several hundred to 3,000 patients are monitored in clinics and hospitals to carefully determine effectiveness and identify further side effects. Very rare diseases may have fewer study patients. Different types of patients and ages are included. The manufacturer may look at different doses as well as the experimental drug in combination with other treatments. This phase runs about about 3 years on average.
  4. Phase 4: Phase 4 studies gather additional information about a product's safety, efficacy, or optimal use after approval. Post-marketing studies may take place in groups of patients who are using the drug in a real-world setting. These studies may identify additional uses, long-term effectiveness, and previously undetected side effects.

Rare side effects that occur in between 1 in 1,000 to 1 in 10,000 people (0.1% to 0.01%) are unlikely to be seen in Phase 1 to 3 studies before approval, but groups of patients this large are not usually studied. These rare side effects are more likely to be found when large numbers of patients use a drug after it has been approved and marketed.

Learn more: How often do side effects occur, ranging from common to rare?

What is a New Drug Application (NDA)?

The New Drug Application (NDA) is the formal step the manufacturer takes to ask that the FDA to approve their drug for US marketing.

NDA: For an NDA, the drug company submits an application which includes thousands of pages of research to the FDA for review. The NDA includes all animal and human data, plus side effects, dosing, and effectiveness. Other information, such as pharmacokinetics (how the drug moves through the body), and specifics of manufacturing are also addressed. The FDA team has 60 days to review the NDA and determine if it will be filed for further review.

CDER expects to review and act on at least 90% of NDAs for standard drugs no later than 10 months after the applications are received. The goal is to review priority drugs within 6 months.

Once an NDA is filed, the FDA reviews the product label (package insert) to be sure the clinical information needed to safely use this drug is outlined. The FDA also takes action to inspect manufacturing plants where the drug will be made.

PDUFA: Some companies will pay for an expedited NDA review with the FDA through a process known as an PDUFA (Prescription Drug User Fee Act), originally enacted in 1992. PDUFA allows the FDA to access more resources to quicken the drug approval process. Many important drugs have been approved through PDUFA, including medicines for cancer, AIDS and heart disease.

Special designations

Drugs that may be the first available treatment for an illness or with a significant benefit over existing drugs may receive one or more special designations:

Orphan drug designations and approvals: Gives financial incentives to sponsors for manufacturing drugs that treat rare (orphan) diseases.

Accelerated Approval: The Accelerated approval process began in 1992 to allow promising therapies for serious or life-threatening conditions to come to market more quickly.

Fast Track: Drugs that treat serious medical condition and fill unmet medical needs may receive fast-track designation based on positive human or animal data.

Breakthrough Therapy: Preliminary clinical research demonstrates that a drug candidate for a serious condition may provide substantial improvement over available therapy.

Priority Review: During Priority Review, the FDA takes action on a new drug application within 6 months, compared to 10 months under standard review.

Learn more: Review FDA drug approval history on Drugs.com

Who is on an FDA Advisory Board?

A group of independent physicians and other clinicians, called an FDA Advisory Board, meets to discuss the NDA with the FDA reviewers and manufacturer of the product. This advisory team includes physicians, pharmacists, chemists, pharmacologists, statisticians, and even patient representatives. These meetings often take one or two days.

After the meeting, the Advisory Board will make a recommendation to the FDA to approve the drug, or not, usually through a vote. The FDA often follows the advice of the Advisory Board, but is not obligated to do so.

In some cases, the NDA may contain sufficient data for FDA to determine the safety and effectiveness of a drug without Advisory Committee input.

How much does it cost to get a drug to market?

It can take billions of dollars for a manufacturer to get a new drug from the laboratory onto the pharmacy shelf. In a study from the London School of Economics, the median cost was determined to be $985 million. Differences can often occur with more expensive therapeutic classes. For example, cancer and immunomodulator drugs have had a median development cost of up to $2.7 billion.

What happens after final drug approval?

After final approval, the drug becomes available for physicians to prescribe. However, drugs may not come to the market immediately because of patents disputes, manufacturing issues, or controlled substance designation from the DEA.

Pricing is usually revealed after approval, but the FDA does not consider drug pricing or economics as part of the FDA approval process. This is in contrast with many other countries that do consider the economic impact of new drugs in their society.

What is the FDA MedWatch safety program?

Once on the market, the drug company will continue to report cases of adverse reactions (side effects) and other clinical data to the FDA. Patients and healthcare providers can also report side effects or other concerns through the MedWatch Program run by the FDA.

When a new risk is identified, the FDA will update the product label, which may include Boxed Warnings, to inform everyone. A Boxed Warning is the FDA's most stringent warning for drug safety and is found in a bolded black box at the top of the package insert.

Related: See New FDA Drug Approvals and New Indications

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Further information

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