How does FDA drug application process work

Introduction

In the biotech/pharmaceutical sector, FDA regulatory decisions are among the most significant catalysts for stock price movement. Approval or non-approval of a drug can rapidly alter a company’s valuation. As a result, understanding the FDA drug approval process, particularly the meaning and timing of PDUFA dates, is essential for biotech investors and analysts. This article explains how pharmaceutical products progress through the FDA review framework.

What is the Food and Drug Administration (FDA)?

FDA is a US federal agency responsible for protecting public health (1). As its name suggests, the FDA fulfills this role by regulating and securing the safety of a wide range of medical products and the food supply.
With respect to medical products, the FDA oversees the safety, efficacy, and quality of human and veterinary drugs, biological products, and medical devices. In addition to its regulatory oversight, the FDA also facilitates innovation in the development of new medical products through regulatory guidance and review pathways. It regulates the marketing approval of these products by evaluating safety and efficacy data and by inspecting manufacturing facilities to ensure compliance with regulatory standards that safeguard product quality and patient safety.

What is the New Drug Application (NDA) and the Biologics License Application (BLA)?

To bring a medical product to market, developers must undergo FDA regulatory review processes. For pharmaceuticals, the FDA classifies products into two categories, drugs and biologics, which are reviewed through two distinct regulatory pathways, NDA and BLA, respectively.
New drugs must undergo NDA process to obtain FDA marketing approval (2). These drugs are typically chemically synthesized small-molecule products, which commonly include oral tablets or capsules. Biologics, in contrast, is regulated through the BLA pathway (3). According to FDA, biologics are products produced in living systems, such as recombinant proteins, monoclonal antibodies, gene therapies, and vaccines, and are therefore classified separately from chemically synthesized drugs (3,4).

How does the FDA drug approval process work?

Both NDA and BLA submissions require substantial clinical evidence, usually derived from Phase 3 clinical trials, to demonstrate the safety and efficacy of the pharmaceutical product. However, BLA submissions often require additional evaluation of immunogenicity (immune responses elicited in humans) and long-term safety, due to the complex and biological nature of these products. For example, in the FDA’s Guidance for Industry — “Immunogenicity Assessment for Therapeutic Protein Products” and “Long Term Follow-Up After Administration of Human Gene Therapy Products” — the FDA recommends that “study subjects may be monitored for an extended period of time” and that “one year or more of immunogenicity data should be collected and evaluated” (5,6).
Both application types must meet Chemistry, Manufacturing, and Controls (CMC) requirements. However, because biologics are produced using living systems, BLA applications are subject to more stringent CMC requirements, including more rigorous and comprehensive inspections of manufacturing facilities (7). As a result, BLA applications are more frequently delayed or not approved due to CMC-related deficiencies.
To initiate FDA review, FDA requires the sponsor to submit a complete application package, including clinical, nonclinical, and CMC data (2,8). The FDA conducts a 60-day filing review to assess application completeness as confirmed by Government Accountability Office (9). Once accepted, the FDA formally begins its review.
According to the PDUFA Reauthorization Performance Goals and Procedures for Fiscal Years 2023 through 2027, under standard review, the FDA review period is typically approximately 10 months (10). The review process generally includes clinical data evaluation, Chemistry, Manufacturing, and Controls (CMC) assessment, labeling negotiations, and pre-approval inspections of manufacturing facilities.

When will you know the FDA’s decision?

Upon acceptance of an application, the FDA assigns a target action date for issuing its regulatory decision, commonly referred to as the Prescription Drug User Fee Act (PDUFA) date. PDUFA, as its name suggests, is a U.S. federal statute that authorizes the FDA to collect user fees from sponsor companies and requires the agency to adhere to defined review timelines for NDA and BLA applications, including the establishment of a target FDA decision date (11).
Although a specific PDUFA date is announced, the FDA’s decision is not always issued on that exact date, particularly when the PDUFA date falls on a U.S. federal holiday (e.g., Christmas). In such cases, FDA decisions are typically issued earlier, often on the preceding business day.

What is a Complete Response Letter (CRL)?

The possible outcomes of an FDA review are approval of the application or issuance of a CRL, which indicates non-approval. A CRL is a formal letter explaining why the FDA cannot approve an NDA or BLA in its current form (12). Common reasons include CMC deficiencies, failure to adequately demonstrate efficacy or safety, or inappropriate, incomplete, or missing labeling information. For instance, FDA issued a CRL to Atara Biotherapeutics (ATRA) for its BLA for tabelecleucel due to CMC deficiencies identified during pre-approval inspections (13).
Importantly, a CRL does not represent a complete rejection of the drug. As highlighted by the FDA in SOPP 8405.1: Procedures for Resubmissions to an Application or Supplement, sponsors may resubmit the NDA or BLA after addressing the deficiencies identified in the CRL (14). However, in some cases, the issues raised in a CRL may be difficult or impractical to resolve. For example, a sponsor may lack sufficient financial resources to conduct additional clinical trials requested by the FDA, in which case the sponsor may choose not to respond to the CRL.
Resubmissions are classified as Class 1 or Class 2 depending on the extent of the required changes (14). Class 1 resubmissions involve minor amendments, such as labeling revisions or limited analyses, whereas Class 2 resubmissions involve major amendments, including new clinical data or CMC improvements. These resubmission classes are associated with different FDA review timelines, typically approximately 2 months for Class 1 and approximately 6 months for Class 2 resubmissions (14). Again, taking Atara Biotherapeutics as an example, FDA accepted Atara’s Class 2 Resubmission for tabelecleucel and assigned a target PDUFA date on January 10, 2026 (about 6 months after filing of resubmission) (15).

Key Takeaways

What is the Food and Drug Administration (FDA)?

The FDA is the US regulatory authority responsible for evaluating the safety, efficacy, and quality of medical products. Its decisions directly determine whether a drug can be marketed in the US, making FDA actions central to biotech investment outcomes.

What is the New Drug Application (NDA) and the Biologics License Application (BLA)?

Pharmaceuticals are reviewed under two main pathways: NDA for small-molecule drugs and BLA for biologics. BLAs typically involve greater complexity and higher regulatory risk due to biologic manufacturing and immunogenicity considerations.

How does the FDA drug approval process work?

Both NDA and BLA approvals require robust clinical evidence, usually from Phase 3 trials, and strict compliance with CMC standards. Manufacturing readiness and facility inspections are critical, particularly for BLA, and are frequent causes of regulatory delays or non-approval.

When will you know the FDA’s decision?

After application acceptance, the FDA assigns a PDUFA target action date. This date represents a key binary catalyst for biotech stocks, although final decisions may be issued earlier if the PDUFA date falls on a US federal holiday.

What is a Complete Response Letter (CRL)?

A CRL indicates that the FDA cannot approve a drug in its current form, most commonly due to CMC, clinical, or labeling deficiencies. While not a permanent rejection, CRLs can significantly delay approval and increase development costs, materially affecting company valuation.

References

1. About FDA – What We Do
2. New Drug Application (NDA)
3. Therapeutic Biologics Applications (BLA)
4. FAQ: Therapeutic Biological Products
5. FDA Guidance Document – Media 85017
6. Long-Term Follow-Up After Administration of Human Gene Therapy Products
7. FDA Guidance Document – Media 170955
8. CBER Biologics License Application (BLA) Process
9. GAO Report: FDA Drug Review and Approval
10. FDA Guidance Document – Media 151712
11. Prescription Drug User Fee Amendments (PDUFA)
12. Complete Response Letter – Final Rule
13. Atara Biotherapeutics Clinical Program Update
14. FDA Guidance Document – Media 84417
15. Atara Biotherapeutics FDA Acceptance Announcement