What Is a New Drug Application (NDA)?

A new drug application (NDA) is the formal final step taken by a drug sponsor, which involves applying to the Food and Drug Administration (FDA) to get approval required to market a new drug in the United States. A new drug application (NDA) is a comprehensive document with 15 sections that include data and analyses on animal and human studies. It outlines the drug’s pharmacology, toxicology, dosage requirements, and the process to manufacture it.

Key Takeaways

  • The new drug application (NDA) is how a drug's sponsor formally applies to the Food and Drug Administration (FDA) to receive approval to sell and market a new drug in the United States.
  • The new drug application (NDA) must include evidence that the new drug is effective, safe, and that its benefits outweigh its known risks.
  • The FDA assigns classification codes to NDAs reflecting the type of drug being submitted and its intended use.

Understanding New Drug Applications (NDA)

The new drug application (NDA) has formed the basis for regulating and controlling new drugs in the U.S. since 1938 and has evolved significantly since then. Under the Food, Drug, and Cosmetic Act (FD&C) passed in 1938, NDAs were only required to contain information relating to the proposed new drug’s safety.

In 1962, amendments to the FD&C Act required NDAs to also include evidence on the new drug’s effectiveness for its intended use, and confirm that its established benefits outweighed its known risks and side effects. In 1985, the Food and Drug Administration (FDA) completed a review of NDA regulations and, in order to expedite the review process, restructured the organization and presentation of information and data contained in the NDA.

When an NDA is submitted, the FDA has 60 days to decide whether to file it for review or reject it if some required information is missing. The goal of the FDA’s Center for Drug Evaluation and Research (CDER) is to review and act on at least 90% of NDAs for standard drugs within 10 months after the applications are received, and six months for priority drugs. The NDA submission process is just one phase of a multi-step process that pharmaceutical companies must navigate in order to successfully bring a new drug to market.

Types of New Drug Applications (NDA)

CDER classifies new drug applications with a code from 1 through 10 that reflects the type of drug being submitted and its intended uses. Drugs also receive a code indicating whether they will receive a standard review or priority review, the latter being reserved for drugs that represent significant advances over existing treatments.

The FDA tentatively assigns NDAs with a classification code at the NDA's filing date. However, the FDA may reassess and change the code before or after the drug receives approval. Below is the list of new drug application classification codes.

New Drug Application (NDA) Classification Codes
Type 1 New Molecular Entity
Type 2 New Active Ingredient
Type 3 New Dosage Form
Type 4 New Combination
Type 5 New Formulation or Other Differences (e.g., new indication, new manufacturer)
Type 6 New Indication or Claim, Same Applicant
Type 7 Previously Marketed But Without an Approved NDA
Type 8 Rx to OTC
Type 9 New Indication or Claim, Drug Not to be Marketed Under Type 9 NDA After Approval
Type 10 New Indication or Claim, Drug to be Marketed Under Type 10 NDA After Approval
Source: U.S. Food & Drug Administration

New Drug Application (NDA) Action Letters

Once the CDER review of an NDA is completed, it issues one of three possible action letters to the pharmaceutical company sponsoring the new drug:

  • Approval Letter: This states that the drug is approved.
  • Approvable Letter: This indicates that the drug can be ultimately approved but lists minor deficiencies that need to be rectified. It often asks for labeling changes and sometimes for sponsor commitment to undertake post-marketing studies.
  • Not Approvable Letter – This lists deficiencies in the application and the reasons why the drug cannot be approved.

Once a company reaches the NDA stage, the probability of the drug receiving FDA approval and being marketed in the U.S. exceeds 80%. Filing of an NDA typically does not result in a substantial increase in the share price of the sponsor company, as most of the stock appreciation is likely to have occurred as the investigational drug progressed through successive phases of earlier clinical trials.