Companies seeking approval for new drugs or biologics must navigate the clinical trials process, which can take over a decade and hundreds of millions of dollars to complete. Only a small fraction of compounds discovered in the preclinical stage will go on to received FDA approval, and in recent years the agency has become even more rigorous in its reviews.

Phases of drug development
In the pre-clinical or drug discovery phase of the approval process, researchers look for potential new compounds to treat targeted diseases. Promising compounds are tested in animals and living tissue until they are refined enough to give to humans. When all tests are completed, the drugmakers file an investigational New Drug Application (IND) with the FDA. In Phase I testing, the new drug is given to a small group of healthy people to see if the drug is safe and well-tolerated. Safe drugs are advanced into Phase II trials, where companies see if their compound is actually effective in a small number of people who have the disease they're targeting. If evidence of efficacy is observed, the drug is moved into large-scale Phase III studies. Positive results at this stage prompt drugmakers to file a New Drug Application (NDA) or Biologics License Application (BLA). An expert panel reviews all the trial data and makes a recommendation to the FDA, which in turn decides whether or not to grant approval.

Low rate of new-drug approval
Following a string of high-profile recalls and safety warnings, the FDA is increasingly rigorous in the review process. As a result, fewer drugs are being approved. Only 21 new drugs got the green light in 2010--fewer than both 2009 and 2008, when 25 and 24 were approved, respectively. However, 2010 was better than 2007, when regulators just 18 medicines-an all-time low. The agency is particularly focused on drug safety. Regulators also want to see evidence that new drugs not only work, but offer real benefits compared to older and less-expensive medications already on the market. Oncology and obesity drugs face the most scrutiny from the agency, while large molecule drugs (biologics) are twice as likely to be approved than than small molecule drugs.