Finance Tips for FDA Drug Approval

In the United States, new medicine undergoes rigorous clinical research to determine its safety and effectiveness before it can be commercialized. Drugs marketed to the public are regulated by the U.S. Food and Drug Administration’s (FDA) Federal Food, Drug, and Cosmetic Act, and are also subject to unique federal, state, and local statutes. For companies in the life sciences and pharmaceutical industry, the process of obtaining the necessary approvals before marketing a drug requires substantial time and financial resources.

We’ve analyzed the various steps companies need to take before they obtain FDA approval to commercialize a new drug, and discuss financial strategies to use during clinical trials to ensure success.

FDA Approval Process

The development and approval process required by the FDA usually involves:

  • Completion of preclinical laboratory tests, animal studies, and formulation studies
  • Submission to the FDA of an Investigational New Drug (IND) application
  • Approval by an institutional review board of clinical sites before each trial may be initiated
  • Performance of human clinical trials to establish the safety and efficacy of the drug candidate for each proposed indication
  • Submission of a New Drug Application (NDA) to the FDA
  • Review by an FDA advisory committee, if applicable
  • Completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced
  • FDA review and approval of the NDA

Clinical Trials: Finance Tips for Success

In an organization seeking FDA drug approval, the clinical operations team is responsible for the delivery of clinical trials that adhere to FDA regulations. It’s their task to design, plan, and physically run the phases of the trials.

To increase the chances of achieving approval, the clinical trials team must evaluate the internal capabilities of the company and its use of third-party vendors or consultants. They must then forecast the financial resources needed to support the strategy by:

  1. Developing a budget with the appropriate level of detail for:
    • Financing sources
    • Timing of financing
    • Payment schedules to vendors
  2. Establishing and tracking the trial’s performance against the strategy
  3. Reconciling performance against budget
  4. Implementing changes as needed

The clinical operations team must work closely and consistently with the finance and accounting team to minimize overages and reduce any disruption in financial resources needed to support the go-to-market strategy. To achieve this, the company’s finance and accounting team must:

  • Update the forecasting model monthly
  • Request financial data from all parties involved, both internal and outsourced
  • Reconcile data received to ensure prepayments and accruals for outsourced work have been properly reflected in the forecasting model, and are in accordance with milestones established in the agreements with the Contract Research Organizations (CRO), Contract Manufacturing Organizations (CMO), and other vendors
  • Discuss the financial results with the clinical operations team to determine the sufficiency for current resources or need for additional financing to support the strategy
  • Revise plans as needed


Having a thorough process will help streamline the complicated path to FDA approval. By aligning the quality control requirements of the FDA with your clinical and marketing strategy, you’ll be able to gain more accurate and reliable data, keep better track of progress, establish accountability, and increase the probability of positive outcomes.