Finchem spoke to the 16-man Player Advisory Council on Monday and updated them on the tour's progress.
'We believe now that we'll complete work on a policy this year, and the elements of the policy could very well be executed during '08,' Finchem said at the Deutsche Bank Championship.
He said drug testing would be only one part of the policy.
Still to be determined are exemptions for therapeutic use, such as former PGA champion Shaun Micheel taking medication to cope with low testosterone. Other details that have not been completed include which drugs should be banned and penalties if a player tests positive.
Finchem said the first step would be developing a rule against certain substances, and having enough time to explain the policy to players.
Golf has come under increasing pressure in the last year to come up with a drug policy.
'I think we're at a point where to maintain confidence in the public and the fans, we have to take this step, even though there's great speculation about the extent to which substances can help you in this game,' Finchem said.
The LPGA Tour already has said it will begin drug testing next year, and it has given its players a list of banned substances. The European Tour also hopes to begin drug testing next year, and the USGA experimented with it at the World Amateur Team competition in South Africa last November.