New Drug Development Process

Steps from Test Tube to New Drug Application Review

The fully capitalized cost to develop a new biotechnology drug, including studies conducted after receiving regulatory approval, averages $1.2 billion, according to an analysis by the Tufts Center for the Study of Drug Development (2006). The Tufts Center study was based on compound-specific costs for a sample of 17 investigational biopharmaceuticals from four firms that first entered clinical testing from 1990 to 2003. Notably, only five in 5,000 compounds that enter preclinical testing make it to human testing, and only one of the five tested in people is approved by the Food & Drug Administration (FDA).

The average time for the FDA to approve new drugs declined to 1.1 years in the 2005-07 period, but longer average clinical phase time means combined clinical and approval time continues to hover around eight years. The Tufts Center maintains unique databases that provide the most detailed source of historical information available on pharmaceutical and biopharmaceutical innovation in the United States. These databases contain data on products approved from 1963 to the present (Tufts Center for the Study of Drug Development).

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Source: U.S. Food and Drug Administration Center for Drug Evaluation and Research Handbook.