DEFINITION of 'Drug'

A substance that cures, treats, prevents or reduces the symptoms of a disease or ailment. Patients can take drugs orally as a tablet or liquid, by injection into a muscle or vein, by absorption through the skin, via nasal inhalation or through a number of other methods. In the United States, drugs are regulated by the Food and Drug Administration (FDA), and its Center for Drug Evaluation and Research (CDER) acts as a consumer watchdog. Because drugs are such big business, some unscrupulous companies produce counterfeit drugs. These are illegal and at best may be ineffective and at worst may be deadly.

BREAKING DOWN 'Drug'

Any company wanting to sell a drug in the United States must first conduct tests to determine whether the drug is safe and effective. The company first tests the substance in the lab and sometimes on animals before deciding whether it makes sense to test it on humans. If tests on humans show the drug to have a medical benefit and to be safe, the company submits the evidence to the CDER, which then employs pharmacologists, chemists, statisticians, physicians and other scientists to conduct an independent and unbiased review. The drug company will be allowed to sell the drug if the CDER determines that the drug’s benefits outweigh its risks.

Drugs can be name-brand or generic. Name brand drugs go through rigorous clinical trials to gain approval; manufacturers of generic drugs must prove that their products have the same therapeutic effect as the name-brand equivalents to receive FDA approval to market and sell them as substitutes.

For pharmaceutical companies, drug development and testing is an expensive undertaking, and while a successful drug can be highly profitable, those profits must be high enough to balance out the losses from all the failed drugs, and failures are much more common than successes.

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