FDA stands for Food And Drug Administration. The FDA is a government agency established in 1906 with the passage of the Federal Food and Drugs Act.

The FDA regulates the development of new drugs. The FDA has developed rules regarding the clinical trials that must be done on all new drugs. Pharmaceutical companies must test drugs through four phases of clinical trials before they can be marketed to individuals.

It is illegal to sell a drug or device with advertised medical claims without FDA approval, and insurance companies will typically not pay for their use. Traders who buy and sell biotech and pharmaceutical companies track FDA approvals closely.

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