Merck Manual

Please confirm that you are a health care professional

honeypot link

Drug Development


Shalini S. Lynch

, PharmD, University of California San Francisco School of Pharmacy

Reviewed/Revised May 2022 | Modified Sep 2022

Promising compounds can be identified by mass screening of hundreds or thousands of molecules for biologic activity. In other cases, knowledge of the specific molecular pathophysiology of various diseases allows for rational drug design via computer modeling or modification of existing pharmaceutical agents.

During early development, potentially useful compounds are studied in animals to evaluate desired effects and toxicity. Compounds that seem effective and safe are candidates for human studies. A protocol describing the clinical study must be approved by an appropriate institutional review board (IRB) and the US Food and Drug Administration (FDA), which then issues an investigational new drug (IND) exemption permit. At this point, the patent time period for the compound begins, which usually provides the owner with exclusive rights for the next 20 years; however, the drug cannot be sold until it is approved by the FDA.

Phase 1 evaluates safety and toxicity in humans. Different amounts of the compound are given to a small number (often 20 to 80) of healthy, young volunteers to determine the dose at which toxicity first appears.

Phase 2 determines whether the compound is active against the target disorder. The compound is given for treatment or prevention of the target disorder. An additional goal is to determine an optimal dose-response range.

Phase 3 evaluates the drug’s effect in larger (often hundreds to thousands of people), more heterogeneous populations in an attempt to duplicate the drug’s proposed clinical use. This phase also compares the drug with existing treatments, a placebo, or both. Studies may involve many practicing physicians and multiple research sites. The purpose is to verify efficacy and detect effects—good and bad—that may not have been observed during phases 1 and 2.

When sufficient data have been collected to justify and request approval of the drug, a new drug application (NDA) is submitted to the FDA. The process from early development to approval of a drug may sometimes take up to 10 years.

Phase 4 (postmarketing surveillance, pharmacovigilance) occurs after the drug is approved and marketed and can include formal research studies along with ongoing reporting of adverse effects Adverse Effects Obviously, a drug (or any medical treatment) should be used only when it will benefit a patient. Benefit takes into account both the drug's ability to produce the desired result (efficacy) and... read more . Phase 4 typically involves larger populations and longer time periods than phases 1 to 3, which helps detect uncommon or slowly developing adverse effects that are unlikely to be recognized in shorter, smaller studies. Also, real-world use of drugs is not limited to patients fulfilling the strict eligibility criteria used in clinical trials; drugs tend to be used in patients at higher risk of adverse effects. Often, special subpopulations (eg, pregnant women, children, older people) are studied. Some drugs approved by the FDA after phase 3 have been withdrawn from the market after newly recognized and serious adverse effects have occurred in phase 4.

NOTE: This is the Professional Version. CONSUMERS: View Consumer Version
quiz link

Test your knowledge

Take a Quiz!