Product Development

The process to develop new medicines requires a significant amount of time and financial investment. The number of potential compounds that move from discovery to approval and marketing are reduced in each phase of development. For every 5,000 compounds that enter preclinical testing, only five will continue on to clinical trials in humans, and only one will be approved for marketing in the United States. The U.S. Food and Drug Administration (FDA) regulates the development process of new drugs. According to the Tufts Center for the Study of Drug Development, the cost of developing a new drug averages about $897 million over 10 to 15 years.

Small molecule drug products and therapeutic biologics are regulated by the Center for Drug Evaluation and Research (CDER). The FDA has been established to ensure that new products are safe and effective, among other things. All new therapies must undergo a stringent process of preclinical and clinical evaluation. After each developmental stage, the sponsor of the new product meets with the FDA to determine next steps and establish end points for future trials. Similar processes are required in other countries.


Preclinical Studies

Before testing of a potential therapeutic begins in humans, laboratory and animal studies are carried out to determine safety and biological efficacy. These studies provide information on potential toxicities and side effects, the amount of the product that is taken up by the target tissue, the amount of time the product stays in the body and the product’s therapeutic effect.


Clinical Evaluation

After the preclinical studies are complete, the company approaches the FDA with a request to test the new product candidate in people. The company files an Investigational New Drug application (IND), which among other information contains the data from preclinical studies. Accompanying this is a proposal to study the safety and dosage in people.


Clinical Trials
Phase I: Safety

A Phase I clinical trial is the first step in a clinical trial program for a new product candidate. This trial is designed to assess safety and establish dosing for future trials. Phase I studies are usually undertaken in groups of between 20 and 80 healthy volunteers and last an average of six months to a year, depending on the FDA’s recommendations. Serious adverse events from any clinical trial must be reported promptly.


Phase II: Safety and Efficacy

Phase II studies are undertaken to determine the dose and efficacy in treating the targeted disease or medical condition. Unlike the Phase I trial, Phase II studies are conducted in patients to test for therapeutic effect. They are usually larger, involving generally 40 to about 300 individuals. Multiple Phase II trials may often be carried out in order to study a drug in a variety of patient populations or disease indications.


Phase III: Controlled Safety and Efficacy

Phase III studies are designed to confirm efficacy in larger patient populations and to continue monitoring for rare but significant side effects. These trials involve several hundred to about 3,000 individuals depending on the product and disease indication. Phase III studies may include multiple “arms”, which compare the product to other treatment options or in combination with other therapeutic approaches.


Regulatory Filing

When the company finishes collecting and analyzing the data from the clinical trials, it submits an application to the FDA for marketing approval. Biopharmaceuticals derived from biotechnology are now reviewed by CDER in the form of a Biologics License Application (BLA). The BLA must contain all the data the company has collected on the drug. In accordance with FDA regulation, the FDA has at least six months to review a “priority” application (drugs for a life-threatening need) and 10 months for a standard application. Ultimate approval can take up to two years.


FDA Approval and Post-Approval Monitoring (Phase IV)

After the FDA has approved the BLA, physicians can prescribe the new biopharmaceutical or drug. Companies must continue to monitor for any adverse reactions and report these to the FDA. In certain instances, companies may conduct post-marketing studies, known as Phase IV studies, to evaluate long-term or combination therapies’ effects.



Under the regulations governing biopharmaceuticals and drugs, companies must keep manufacturing records for every lot of product produced, and in certain cases, submit samples of the production lots to the FDA for validation prior to marketing. Manufacturing facilities are also inspected annually by the FDA.