Become a better Biotech Stock Trader by understanding each phase of the FDA Approval Process.
Another resource we offer for those interested in biotech stocks is our FDA Calendar page where we also discuss potential timing and the top ten catalyst events for biopharma stocks.
The FDA Approval Process Starts with the Pre-Clinical Phase
In the pre-clinical or drug discovery phase of the approval process, researchers look for potential new compounds to treat targeted diseases. Once a compound has been identified and refined to a formula that can be tolerated by humans, its toxicology is tested in animals and living tissue. The process takes roughly three and a half years. During this phase researchers look for:
- correct dosage level
- how frequently it should be administered
- The best delivery system (oral, topical, intravenous, etc.)
- short- and long-term survival of the animals
After pre-clinical testing is completed, the company then files an Investigational New Drug Application (IND) with the FDA. Fast Track Designation is an expedited review of a drug that is given to a company whose drug or biologic makes both a product and a marketing claim that addresses an unmet medical need. It can be granted at any point after the FDA approves an IND.
If the FDA approves the IND, the experimental drug then moves into Phase I human testing. In this phase, the drug is tested in a small number (under 100) of healthy participants. Researchers look to see how well the drug is tolerated, how it is processed by the human body, and the correct dosing. This process takes a year.
Once a compound is found to be well tolerated in healthy individuals, it is then tested for effectiveness for a targeted disease in a small number of patients. In this phase 100-300 people are administered the investigational drug to see if it actually works, and to determine its short-term effects. This process takes about two years.
Phase III is a large-scale study of the effectiveness and side effects of the drug in a larger population, usually ranging from 1000-3000 patients. If the drug is submitted to the FDA for approval, the FDA will look at the Phase III data to determine if the drug is safe and effective. Aside from testing the drug’s viability, the company producing the drug also determines the logistics involved in creating a large supply of the treatment. Phase III of the FDA approval process takes about three years.
New Drug Application (NDA) or Biologics License Application (BLA)
If the drug proves to be safe and effective, the company then files an NDA or BLA with the FDA. NDAs and BLAs are typically 100,000 pages long and include results of human and animal trials as well as information on how the drug is manufactured. It usually takes the FDA 1-2 years to complete the review process and approve a drug. However, there are cases when approval can be accelerated.
At the time of application Priority Review can be granted to drugs that treat an unmet medical need.
Orphan Drug Status is granted to drugs that treat rare diseases, or diseases that have no other available treatments.
Once a drug has received FDA approval it is then marketed to the general population. Short- and long-term side effects continue to be monitored and results are submitted to the FDA. Companies will also look for additional indication for the drug. In order for the drug to be approved for a new indication, it must receive approval from the FDA.
Expedited Drug Approval Programs
In addition to the above four phases of FDA’s drug approval process, the FDA has four expedited programs for drug approval:
- Fast-track designation
- Breakthrough therapy designation
- Accelerated approval
- Priority review designation
Each has its own set of criteria, but one drug may qualify for one or more of the programs. This means there are multiple ways for drug companies to gain faster approval.
Fast Track Designation
Fast Track Designation hastens the review of drugs for serious conditions and unmet medical needs. The FDA does not have a concrete way to determine what it considers “serious,” but in general it considers whether a new drug will improve survival, day-to-day functioning and prevent the medical condition from getting worse.
Some of the diseases the agency considers serious include obvious ones like AIDS, Alzheimer’s and cancer. Others in include epilepsy, depression and diabetes. A drug automatically fulfills an unmet need if there are no available treatments. If treatments are available, new drugs may still be considered if they are less toxic than those already on the market, have a treatment advantage or may help people for whom current drugs don’t work.
Drug companies can file for fast-track approval at any time during a drug’s development. Once the FDA approves an application into the program, it remains in close contact with the drug company during the approval process. Companies can also submit all relevant paperwork at one time, which differs from the traditional step-by-step drug approval process. Drugs that receive fast-track designation are also eligible for Accelerated Approval and Priority Review.
Breakthrough Therapy designation expedites the approval of drugs that treat serious conditions. In order to qualify, a drug must have preliminary evidence that shows it is superior to a drug already on the market on “clinically significant endpoints.” In other words, the drug has to make a difference on survival time or on serious symptoms of a disease. The FDA works closely with companies who produce drugs eligible for this designation and even helps guide them through development of the drug. Senior FDA managers are also involved in these projects. Medications that qualify also receive the benefits of Fast-Track and Priority Review.
Accelerated Approval regulations allow the FDA to approve drugs intended to treat serious conditions using clinical evidence that shows a possible benefit called a surrogate endpoint. Endpoints are the desired effects of a drug, such as extending life or reducing symptoms. Surrogate endpoints do not have to be as adequate or well controlled as actual clinical endpoints, and they are only “Priority Review”
When drugs gain Priority Review status, the FDA diverts many of its resources to the review of a drug, helping it get approved faster. Companies must provide evidence that the new medication:
- Is highly effective in treating, preventing or diagnosing a disease or condition.
- Eliminates or substantially eliminates adverse reactions that prevent treatment.
- Is safe and effective in a new subpopulation of people (such as elderly patients or children).
- Can help patients be more compliant with taking it.
Approval for Medical Devices
The above four fast track options apply to drugs only, but medical devices have their own speedy process called the 510(k) premarket notification program.
510(k) Premarket Program
The 510(k) program allows some medical devices that the FDA determines to be low risk on the market without comprehensive testing through a process called premarket notification. If a device is already on the market that is “substantially equivalent” to the new product, it is allowed on the market. Critics say while patients and doctors get access to new products quicker, there may be a greater chance that those who receive the devices may also be at greater risk of suffering complications from poorly tested devices.
The 510(k) is a part of the Medical Device Amendments to the Federal Food, Drug and Cosmetic Act enacted in 1976. Under the Act, all medical devices are classified into three categories depending on the risk that serious injury or death may occur.
The FDA defines the classes as:
- Class I: These devices are not considered high risk and include items such as tongue depressors, bandages and arm slings. The FDA does not extensively review these products with 95 percent receiving exemption from regulatory process. Of all devices on the market, 47 percent fall in this category.
- Class II: The risk from these devices is considered moderate but not risky enough to merit companies providing extensive safety and effectiveness data to the FDA. About 43 percent of all devices belong in this category.
- Class III: This is the highest risk category, and devices such as pacemakers and breast implants are a part of this class. These products must all go through the full premarket approval processes, which means proof of safety and effectiveness must be given to the FDA. Only 10 percent of all devices fall in this category.
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