There are key distinctions between randomized and observational study as given below:
Randomized study is carried out by dividing the patients into two groups and one is tested by interventions and second with placebo depending upon the disease under study and analyzing the results with specific measurements. Both the variables and subjects under study are in control of the researchers in randomized study. Researchers are unable to conduct randomized study when variables are not under control of the researchers because of logistical constraints and ethical reasons.
Randomized clinical trials reduce all type of confusing variables and biases along with subject being randomized. Companies use randomized clinical trials show that their drug is better than the current standard of cares and they submit their measurements and drugs to FDA to get approval and enable them to send their drugs to the market in order to improve the quality of life of the people.
Randomized study is very expensive and takes years to conduct.
Observational study occurs when researchers are studying the possible effects of treatment on a subject where the assignment of subject in treated group versus a control group is outside the control of the researchers. Observational studies are carried out when randomized study is not possible due to some ethical reasons.
Observational studies provide information on real world practice and useful things and they also determine the studies that can be carried out through randomized clinical trials by formulating the hypothesis.