What Is a New Drug?

A new drug is a medication or therapy that has not been used before in clinical practice to treat a disease or health condition. A new drug is developed by a pharmaceutical company and must undergo various clinical trials to test its efficacy and safety. Before it is marketed in the U.S., it must first obtain approval from the Food and Drug Administration (FDA).

Key Takeaways

  • New drugs are innovative compounds that have not yet been brought to market used to treat a disease or health condition.
  • The FDA differentiates a new drug from a drug if the scientific community cannot ensure its safety and effectiveness with what it is prescribed for.
  • The process to introduce a new drug in the market is an expensive and multi-step one, involving FDA approvals, extensive research, and clinical trials.
  • The FDA has made efforts to approve more new drugs in the last few years, greatly helping certain health conditions.

Understanding a New Drug

A new drug may be an innovative new compound that is classified as a new molecular entity by the FDA, or it may be related to a previously approved product. Getting FDA approval for a drug is a multi-step process that takes years and millions of dollars.

The FDA defines a new drug as different from a drug when it is not accepted by the scientific community as one that is "safe and effective for use under the condition prescribed, recommended, or suggested in the labeling."

How a New Drug Gets Approved

The process of getting a new drug to market involves the following steps:

  • Development of a new drug compound
  • Animal tests for toxicity, to ensure the compound is safe for humans
  • Investigational New Drug (IND) application
  • Phase 1 clinical trials or studies, where the emphasis is on the drug’s safety and side effects
  • Phase 2 clinical trials, where the focus is on the proposed drug’s effectiveness
  • Phase 3 clinical trials, which are very large, multi-stage trials that gather more information about the drug’s safety and effectiveness
  • New Drug Application (NDA) to the FDA, which is a comprehensive document containing all the above information
  • NDA review by the FDA
  • Drug labeling review and facility inspection by the FDA
  • Drug approval (or rejection) by the FDA

The FDA’s Center for Drug Evaluation and Research (CDER) is the specific body within the FDA that is responsible for reviewing the new drug development process. The CDER has an in-depth understanding of the science used to create new products, testing processes, manufacturing procedures, and the diseases and conditions that are sought to be treated by new products. The CDER provides the scientific and regulatory advice needed to bring new products to market.

A new drug candidate can fail at any step of the process. The clinical trials are meant to establish unequivocally that the drug is safe and effective in treating the targeted indication. However, accelerated versions of the approval process can be employed in certain cases, such as the development of a promising new drug that may treat a rare or life-threatening condition.

The FDA has recently made efforts to increase its rate of drug approvals. As of Dec. 23, 2020, the FDA has approved 53 new drugs for the year. The agency approved 48 new drugs in 2019. In 2018, the figure was 59 and it was 46 in 2017.  These figures compare favorably with the 22 new drugs approved in 2016. From 2000 to 2010, an average of 23 new molecular entities (NMEs) were approved per year, which grew to 35 in 2011, and from 2011 to 2018, an average of 59 NMEs have been approved per year.

Real-World Example

At an average cost of $2.1 million per patient, Zolgensma is the most expensive drug to ever be approved by the FDA. Made by a company owned by Swiss pharmaceutical giant Novartis, Zolgensma treats spinal muscular atrophy (SMA), a genetic disorder that destroys nerve muscles. Only one other drug in the market, Spinraza, treats the same condition.

The pre-investigational new drug (IND) meeting, which ensures that future development and pre-clinical trials will be acceptable to the FDA for Zolgensma was conducted in 2011. The drug was placed on a fast track designation that is reserved for drugs that meet an unmet medical need in 2013. It was also granted the orphan drug designation in 2014 to enable it to take advantage of tax credits for clinical trials of rare diseases. After clinical trials were completed and updates to the drug finished, the drug was finally approved in June 2019.

Zolgensma's high prices are a reflection of its research and development (R&D) costs and market economics. SMA is a rare condition and clinical trials were conducted for select individuals. Since the genetic disorder treated by Zolgensma is rare, the drug must be priced such that it is sufficient enough to fund future research and operational costs.