An approved drug is a preparation that has been validated for a therapeutic use by a ruling authority of a government.
In the United States, the FDA approves drugs. Before a drug can be prescribed, it must undergo the FDA's approval process. Drug companies seeking to sell a drug in the United States must first test it. The company then sends CDER the evidence from these tests to prove the drug is safe and effective for its intended use. A team of CDER physicians, statisticians, chemists, pharmacologists, and other scientists reviews the company's data and proposed labeling. If this independent and unbiased review establishes that a drug's health benefits outweigh its known risks, the drug is approved for sale. The center doesn't actually test drugs itself, although it does conduct limited research in the areas of drug quality, safety, and effectiveness standards.
In the European Union, it is the European Medicines Agency (EMA) that evaluates medicinal products.
On average, only one in every 5,000 compounds that makes it through lead development to the stage of pre-clinical development becomes an approved drug. Only 10% of all drugs started in human clinical trials become an approved drug.