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API stands for Application Programming Interface, i.e. API is the way for an application to interact with certain system/application/library/etc. For example, there are API's for OS (WinAPI), API's for other applications (like databases) and for specific libraries (for example, image processing), etc. APIs are usually developed in a form consumable by a client application.
An Active Pharmaceutical Ingredients or API is the ingredient in a finished drug that has the intended therapeutic effect. FDA regulates APIs as drugs because they are drug components. FDA also regulates inactive drug ingredients, but with far less focus or stringency.