Episode 51 – From Science to Shelf: The FDA’s Drug Approval Process

Mike Stull (0:09)

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If there’s one thing you can count on in the pharmacy industry, it’s change.

And much of that change is driven by new FDA approvals. To keep you up to speed on how these approvals work and what employers should have on their radars, I’m joined today by Employers Health Clinical Advisor, Alexis Sova. Welcome to the podcast, Alexis.

I know you’ve written some good content for our website and magazine, EH Connect, so it’s nice to have you with us today. Why don’t you kick us off by telling the audience a little bit about yourself and your role here at Employers Health?

Alexis Sova (1:55)

Yeah, thank you so much, Mike. I appreciate that introduction. So I’m Alexis Sova.

I am one of the clinical advisors here at Employers Health. I’ve been with the company going on three years now, which is crazy to think. So my background is I’m in pharmacy.

I am a pharmacist by trade. I graduated from Ohio State University and did my pharmacy residency actually here at Employers Health. So you might see me on annual reviews or mid-year reviews for some of my clients.

And I am very passionate about the pharmacy benefits space. So I’m really excited to be on the podcast today.

Mike Stull (2:29)

Excellent. I love the topic that we’re going to talk about today. So let’s dive right in.

Can you walk us through the FDA approval process and what it takes to bring a drug from development to the market?

Alexis Sova (2:46)

So there’s a lot here, so I’ll try to keep it as brief as possible. But essentially what happens in the FDA approval process from development to approval is there’s kind of two different separate mechanisms. So there’s the preclinical trials and then there’s the clinical trials.

So when a manufacturer develops a compound or the medication itself, they’ll enter into preclinical trials. And then during this stage, information about safety and efficacy of the drug are identified. Now in those trials, they’ll deem the compound may be safe.

And then the manufacturer will submit an investigational new drug application or an INDA that includes the results from the initial testing. It discusses both the drug’s composition in manufacturing and it will lay out how the drug will be tested in humans.

Now from there, if the INDA is approved by the FDA, the manufacturer will then undergo what’s referred to as clinical trials. And there’s really four phases of those. So phase one emphasizes the safety, and it includes a very small cohort of patients. Typically this is around 20 to 80 patients.

So vastly different from what we might see in phase two or phase three clinical trials. Now during this phase, the goal is really to determine frequent side effects of the medication and to identify just different pharmacokinetic properties of the medication such as metabolism or excretion. Now assuming the results are positive from these phase one trials, phase two trials will then commence.

And in this phase, there are typically a greater number of patients, usually in the hundreds that are enrolled in the study. Now the goal here is to determine the efficacy of the drug in treating a certain disease state or a condition, but safety is still evaluated in this phase.

Now after phase two is completed, again just assuming that the results are positive, the FDA and the manufacturer will discuss the process in which those phase three studies should be conducted.

Now this is the final phase before a manufacturer will submit a new drug application for review and potential approval. And in this phase, there are thousands of study participants. So the goal of phase three trials are to investigate the safety and efficacy in a larger population.

And typically here, you have more diverse patients, and you can investigate the drug at different dosages or to see how it will impact any other medications that patients might be taking at the same time. Now if a drug has a positive phase three readout, the manufacturer will then submit a new drug application to the FDA for review. And this includes all of the preclinical and clinical trial information, how the drug acts in the body, and any information about how the drug was manufactured itself.

Now if an application is not approved, the FDA will issue a complete response letter that will denote that the application needs to be revised in any way. And depending on what is outlined, the manufacturer may either decide to withdraw the application altogether or they might decide to resubmit it at a later date with more evidence. And we actually saw this pretty recently with Zepbound seeking approval for heart failure, deciding to withdraw the application and submit at a later date.

Now if the INDA is approved, there’s an independent review team that is comprised of various health scientists and healthcare professionals that will review the research. And approval is typically granted six to 10 months after the submission. And then after the drug is approved, the manufacturer will continue to gather data in phase four trials. And at this point, it’s required for the manufacturer to submit periodic safety updates to the FDA.

So as you can see, this is a lot. And I want to point out that this is a very time-intensive process that comes with significant financial impacts.

So the average time it might take from drug discovery to getting the drug approved itself can be on average 10 to 15 years. And the estimated costs with research and development can range anywhere from, you know, $300 million to upwards of $4 billion, just depending on various factors.

Mike Stull (6:50)

So it sounds like safety, side effects, efficacy, all critical parts of the process here. When you talk about efficacy, one of the big things that I learned probably early on by one of our first pharmacists that we had here at Employers Health was how the FDA looks at efficacy. And I think it’s very interesting, and maybe the audience will find it interesting as well, if they weren’t already aware.

You know, when these clinical trials are evaluating for efficacy, what are they typically comparing against?

Alexis Sova (7:30)

Yeah, so typically, when a drug’s first gaining FDA approval, they’ll compare it against placebo. So, you know, they’ll take an active drug ingredient and compare it to something that doesn’t have any active ingredient itself. So it’s really taking a look at those primary endpoints, if the drug is showing any statistical significance, but it also takes into account clinical significance as well.

So it’s not about, you know, just using weight loss as an easy example. It’s not about if they’re experiencing, you know, 11% weight loss compared to 10% weight loss. It’s really what does that mean clinically in terms of efficacy.

Mike Stull (8:14)

Thank you. Thank you for explaining that. I think sometimes we think when a new drug comes to market, it’s because it’s better than everything else that’s out there, and that doesn’t necessarily have to be the case.

But talking about when a new drug is approved, I mean, how do PBMs respond and how quickly can plain sponsors start to feel the impact?

Alexis Sova (8:38)

So after the drug is typically approved, it doesn’t necessarily mean it’ll be on the market immediately, and I think that may be a common misconception there. So this is why we typically see a difference between the approval date and the actual drug launch date. So after its approval and after its launch, PBMs will usually place these new drugs on what is referred to as a new-to-market block, and this can be anywhere from six months upwards.

And so during this time, patients can still access the therapies if they’re launched through the medical necessity pathway. But this really grants time for the PBM’s Internal Pharmacy and Therapeutics Committee to evaluate the drug and then to gather additional marketplace data and compare the new therapy to any drugs that are currently on the market. And this is really to assess where it should be placed on the formulary or if it should be placed on the formulary.

So while there’s not really an average time frame of when a manufacturer may decide to launch the products, once the medication launches, plans may see the uptick of the medication months or even years down the line, which is what we see in most cases.

Mike Stull (9:44)

You talked about new-to-market review, looking at utilization management formulary placements. Talk about some of the pros and cons of implementing utilization management strategies when new, higher-priced drugs become available.

Alexis Sova (10:03)

Yeah, so I think the pros of implementing utilization management strategies when higher-cost therapies are launched, this really ensures that the drug is appropriately managed to contain costs and avoid any unnecessary use for the patients. And I think one of the easiest, most recent examples that I can think of under one of our PBM arrangements is the implementation of the Rezdiffra Prior Authorization. So this was a drug that was approved in March of last year.

And this one was pretty notable as it marked the first drug to be approved for the condition MASH, or Metabolic Dysfunction Associated Steatohepatitis, which is a type of liver disease that affects a large population of U.S. adults, so roughly 9 to 15 million. So when it was launched, its price was about $47,000 a year. And our aim was really to proactively provide those utilization management opportunities just due to the cost and, again, the number of patients that may be utilizing the medication.

And we wanted to ensure that those that were actually being prescribed the medication met the appropriate criteria. So I think most plan sponsors would agree that it’s a lot easier to have these opportunities in place earlier rather than later to eliminate any potential disruption and eliminate the disruption that we might see in a patient’s treatment cycle. Now, one of the biggest cons includes what I had just alluded to with the potential disruption to patients.

Although it’s not always the case, these high-cost drugs are often as synonymous with specialty medications. And patients that are utilizing these specialty therapies may be on numerous other medications to manage their condition. They might require more frequent visits with health care providers and may already be facing barriers just as a result of their disease state or condition.

So through implementing some utilization management strategies, just depending on the type, can be an unnecessary barrier that the patient has to experience. Now, this is also one of the reasons why our clinical team will often assess approval and denial rates of a medication. So if the approval rate is high, then typically we’ll assess, is this form of utilization management really providing the benefit, or is it just serving as a barrier?

Mike Stull (12:16)

I love how you roll the MASH, what MASH means, right off your tongue. So that should be a contest. We should do a contest for the average benefits person to see who can say those.

Okay, let’s look into the future a little bit here and talk about what’s coming down the FDA pipeline. You know, what kind of drugs are in that pipeline that can significantly impact pharmacy costs or plan design strategies, you know, as we think about the second half of 2025 and heading into 2026 and beyond, I guess.

Alexis Sova (12:57)

Yeah, and I love this question. Like I said, I am somebody that is very passionate about the pharmacy landscape, and I think it’s just very interesting altogether. So while there certainly have been some novel approvals, mostly including those Vertex pharmaceutical drugs for one, for cystic fibrosis, which is Alyftrek, and their non-opioid pain medication, Journavx.

I know everyone is also tired of talking about a certain class of medications that I’m going to allude to here pretty soon, but I think what just keeps coming to mind for these drugs, just due to the sheer number of patients that will be impacted and the costs associated with the class, are the weight loss medications and the GLP-1s and their supplemental indication pipeline.

So I think there has been a lot of anticipation around new product launches in the weight management space to hopefully drive down some of those costs, but there are currently over 225 medications for weight loss in the pipeline today. So I know I didn’t necessarily talk about this earlier, but since, you know, 225 seems like a pretty dramatic number of medications and, you know, how are we going to decide which ones to include on the formularies and which ones really show notable weight loss, I think one thing that’s important to keep in mind is the percent of drugs that actually successfully make it through research and clinical trials to gain FDA approval is about 10 to 15%. So we won’t necessarily see that number of drugs actually coming to market.

However, there’s a handful that we are expected to see launch here in 2026, which I think is pretty exciting. And in terms of new drug approvals, we’re expecting to see oral semaglutide gain approval in early 2026, which would be more of an oral weight loss option compared to what’s on the market today with some of the subcutaneous injection options. Now, we’re also expecting to see various weight loss medications with different mechanisms of action, including CagriSema that offers an amylin analog combined with a GLP-1 receptor agonist.

And then we’re also seeing the GLP-1 and glucagon receptor agonists, such as Cervotatide. And then finally, a GLP-1, GIP, and glucagon receptor agonist, Ritadratide, that’s supposed to gain approval in late 2026. So with these different mechanisms of action, they are promising a more substantial weight loss.

But outside of these new products, we’re also seeing GLP-1s that are currently approved seeking approval for additional indications. So the one here that we’re seeing nearing approval in Q3 of 2025 is Wegovy for the treatment of MASH, which is funny that we talked about Rezdiffra a little bit earlier. So we may see shortly in the later half of 2025 or early 2026 the additional approval of Wegovy for those with heart failure with preserved ejection fraction in those that are also obese.

And up until this point, we have really seen the GLP-1s that are on the market today seek the additional indications for those that have that overweight and obese component. So not necessarily opening up the patient population that would be eligible for treatment, but more so directing the patients to these therapies for their specific comorbid conditions. Now, I think that as these additional indications do gain approval, there may be an overall push from members to open access to weight loss medications if there already is in that pathway today.

But I think we’re hoping to see with some of those PBM announcements in the weight loss space and with newer medications coming to market that the cost will start to come down. So these therapies can become more accessible.

Mike Stull (16:38)

People probably hear about Wegovy getting approved for an additional indication and think, oh no. I think it’s important to know that, you know, when you think about the price of Rezdiffra, which I believe is a little over $4,000 a month, moving to Wegovy would be quite a deal comparatively speaking.

Alexis Sova (17:03)

Absolutely. And, you know, it’s pretty interesting in some of those additional indications too, just in the clinical trials and what we’re seeing, that I think it would be important for plan sponsors to keep in mind is the BMI thresholds for these indications. So I know with sleep apnea for Zepbound, we saw an average BMI of about 39 in clinical trials.

So really trying to decide, you know, is this population reflective of my patient population and the members that our plan covers? I think that’s going to be most critical.

Mike Stull (17:36)

And that throws a whole, you know, we could probably do another podcast around comparing clinical studies to FDA labeling. And I know even with the GLP-1s for weight loss, the clinical studies, the population was a lot, the BMI was much higher than what the label ended up being approved for. And when we looked at the MACE indication, I think the population was not only had a higher BMI, but also, we’re older.

And so it’s really interesting to dig into the clinical trials, what the population looked like, what the actual results told us versus what the FDA labeling ends up ultimately being.

Alexis Sova (18:27)

Absolutely. I completely agree with you there.

Mike Stull (18:30)

What about price? So when does the manufacturer typically set price?

Alexis Sova (18:37)

That’s a great question. I think that to determine price, and mind you, this is just coming from someone with a background mostly in managed care, not necessarily so much so with industry. But I think some of the different components that manufacturers have to keep in mind when they’re setting the price is the price of the medications that are currently on the market that can be comparable to the condition that they’re hoping to treat with their medication.

So I don’t necessarily think that it’s something that’s considered early on in the clinical trial development, but more so in the phase three stages of clinical trial development. And definitely something I know that we saw some legislation that was approved a couple years ago for the Pre-Approval Exchange Information Act, where it required those manufacturers to add that monetary component to some of the data that they’re presenting to plan sponsors. So that is something that they have to provide upfront before their drug is approved, but it’s mostly a range of the cost of the medication and not necessarily a set price until after it’s approved.

Mike Stull (19:47)

Yeah, that’s always one of the harder things to determine is how is the manufacturer going to price this product? And certainly we’ve seen over the years where manufacturers will price the product based on PBM access. So do you use a high price with a big rebate?

Do you use a lower price with a smaller rebate? Again, it gets back to what are you competing against and really what the appetite looks like from the marketplace at any given time. So we’ve touched on a lot of things today.

There’s obviously a lot of FDA approvals occurring each year. What’s the practical way for plan sponsors to stay informed without getting totally overwhelmed by all of the clinical details?

Alexis Sova (20:43)

That’s a great question and admittedly one I still struggle with today. I’m one that likes to keep a constant eye on the pipeline, but I know that’s not necessarily feasible. So I would say the most practical way to stay informed as a plan sponsor is really relying on our clinical team and the PBMs. So I think the PBMs or most of them do post a quarterly pipeline report. So if you are someone that’s interested in knowing more, I think that’s a really great place to start. And then again, just looking at your population that you cover and kind of pointing out the ones that you would feel that are most notable to your plan. Now I know from an internal clinical perspective, we do do our best to monitor the pipeline to keep on top of any new drug approvals and communicate those that we feel might make a big impact to most of our plans.

And we try to provide this information in terms of conferences or our podcasts or even our articles that we put out. But if you are looking at those quarterly pipeline reports and are curious just about how any of those drugs might impact your plan, we can certainly field those questions on our clinical team as well.

Mike Stull (21:52)

And it’s certainly something I can tell everyone, you know, as we’re negotiating the contract and thinking about next year, 27, 28, pipeline is always part of the equation. So what are new drugs that we need to be ready for? What are generic launches that we need to be mindful of when negotiating discounts, rebates, any other definitions that are part of the agreement?

All of this stuff ties together. And our clinical team is a key resource in helping us to understand what’s coming, what do we need to be ready for? So thank you, Alexis.

We really, I really appreciate you taking time to be with us today. And like I said, I think we could, we’ll do maybe a part two and we’ll talk about biosimilars and generics because it’s a completely different pathway in terms of approval process. So that’ll give us something to look forward to recording in the future.

Alexis Sova (23:00)

And thank you so much for having me on the podcast as well. I know I wanted to provide some of that information for you all today. But again, it is a pretty heavy topic in terms of where we can go with those generic approval pathways and biosimilar approval pathways.

So I would definitely be interested to dive in further into that in future podcasts.

Mike Stull (23:21)

Excellent. Well, we’ll be sure to have you back.

Alexis Sova (23:24)

Perfect.

Mike Stull (23:25)

Thanks again to Alexis. And before we go, I want to thank our sponsors for helping to not only make this podcast possible, but for supporting us and providing great employee benefits-related content. Thanks to annual supporters, CVS Health and OptumRx. And our premier supporters, EyeMed, AbbVie, Genentech, Quantum Health, Merck, Eli Lilly, ComPsych, Progyny, Novo Nordisk, Noom, Lantern, and Empyrean. Visit employershealthco.com/supporters for a full list of sponsors.

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