Food And Drug Administration - FDA

AAA

DEFINITION of 'Food And Drug Administration - FDA'

A government agency established in 1906 with the passage of the Federal Food and Drugs Act. The agency is currently separated into five centers, which oversee a majority of the organization's obligations involving food, drugs, cosmetics, animal food, dietary supplements, medical devices, biological goods and blood products.

INVESTOPEDIA EXPLAINS 'Food And Drug Administration - FDA'

The FDA is renowned for its work in regulating the development of new drugs. The FDA has developed rules regarding the clinical trials that must be done on all new drugs. Currently, pharmaceutical companies must test drugs through four phases of clinical trials before they can be marketed to individuals. Every year the FDA monitors the testing of 3,000 new drugs on nearly 200 million people to determine their effects. In 2006, the proposed budget for the FDA was approximately $1.8 billion. The FDA is relevant for investors specifically in regards to biotech and pharmaceutical companies. FDA approval can literally make or break the stock of a small company involved in developing new drugs. It is very common to see the stock of these companies skyrocket (or plummet) as test data is released.

RELATED TERMS
  1. Consumer Product Safety Commission ...

    A U.S. government agency that protects the American public from ...
  2. Credence Good

    A type of good with qualities that cannot be observed by the ...
  3. Medicare

    A U.S. federal health program that subsidizes people who meet ...
  4. Household Expenses

    A per person breakdown of general living expenses. It includes ...
  5. Medicare Part D

    A prescription drug benefit program that was created through ...
  6. Medicaid

    A joint federal and state program that helps low-income individuals ...
RELATED FAQS
  1. How does the profit margin compare for a generic drug versus a brand name drug?

    Profit margins are higher for generic drugs compared to brand-name drugs. However, total profits on brand-name drugs are ... Read Full Answer >>
  2. What countries comprise the majority of the global drugs sector?

    The legal trade in pharmaceutical drugs, or the drugs sector or pharmaceutical sector, is highly concentrated in North America ... Read Full Answer >>
  3. What process does a company need to follow to bring a new drug to market?

    Bringing a new drug to market is a lengthy process that follows several stages. The first step, pre-clinical testing, involves ... Read Full Answer >>
  4. What are the primary risks associated with investing in the drugs sector?

    Investors in the drug sector must be aware of the regulatory challenges, competition and financial concerns associated with ... Read Full Answer >>
  5. What is the drugs sector?

    The drugs sector is the portion of industry that develops and produces pharmaceuticals. This sector includes both major corporations ... Read Full Answer >>
  6. What does it mean when a drug is in clinical trials and how long does it take to ...

    Clinical trials are research studies designed to determine the safety and effectiveness of new drugs in humans. All products ... Read Full Answer >>
  7. How does government regulation impact the drugs sector?

    Government regulation lengthens the process for bringing new pharmaceuticals to market and restricts the drugs sector to ... Read Full Answer >>
  8. Why did the Department of Justice launch an inquiry into the sale of ImClone shares ...

    On December 28, 2001, the FDA announced that it was rejecting ImClone's new cancer drug, Erbitux. The drug represented a ... Read Full Answer >>
  9. What does it mean to have orphan drug status?

    In 1982, The U.S. Food and Drug Administration (FDA) recognized the lack of incentive for pharmaceutical companies to develop ... Read Full Answer >>
Related Articles
  1. Stock Analysis

    10 Developments By Gilead Sciences That Could Boost Profits

    Learn about 10 drugs in the pipeline for Gilead Sciences, and learn how it has acquired smaller companies with promising drugs in their pipelines.
  2. Investing Basics

    Top 10 Pfizer Venture Investments

    Learn more about Pfizer Venture Investments, a private equity venture capital firm, and some of the major companies in its investment portfolio.
  3. Economics

    Pharmaceutical Sector: Does The FDA Help Or Harm?

    We look at how the FDA affects the pharmaceutical industry, and how investors can avoid the pitfalls.
  4. Investing Basics

    Top 4 Most Scandalous Insider Trading Debacles

    Here we look at some of the landmark incidents of insider trading.
  5. Investing

    Using DCF In Biotech Valuation

    Valuing firms in this sector can seem like a black art, but there is a systematic way to pin a price on potential.
  6. Mutual Funds & ETFs

    Should You Buy Stock Or An ETF?

    Not all investors are the same. By the same token, not all investment types are suited for each individual investor.
  7. Fundamental Analysis

    Evaluating Pharmaceutical Companies

    Learn how to find a healthy pharmaceutical investment in a market full of weak drugs.
  8. Markets

    A Primer On The Biotech Sector

    Investing in the biotech sector can involve both huge losses and major gains.
  9. Options & Futures

    Getting Through The Medicare Part D Maze

    Having trouble sorting through your prescription drug coverage options? We offer some solutions to the confusing process of selecting the right Medicare Part D coverage for you.
  10. Insurance

    What Does Medicare Cover?

    Don't assume you're insured. Find out what you can expect from this healthcare program.

You May Also Like

Hot Definitions
  1. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  2. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  3. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  4. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  5. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  6. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!