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Pharmaceutical Policy Change and the Safety of New Drugs

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  • Mary K. Olson

Abstract

Policy reforms in the Food and Drug Administration (FDA) have led to substantial increases in the speed of new-drug review. While data show that FDA review times for new drugs have fallen as much as 50 percent, other data show that several new drugs have been withdrawn from the market for safety reasons. This flurry of new-drug withdrawals raises a question. Have increases in the speed of new-drug review had an adverse effect on new-drug safety? This analysis uses adverse drug reaction (ADR) data from the FDA’s Spontaneous Reporting System to examine this question. Specifically, ADR counts for newly approved drugs are estimated as a function of drug characteristics, patient characteristics, and regulatory factors (such as the speed of new-drug review) using negative binomial regression analysis. The primary result is that reductions in new-drug review times are associated with increases in both ADRs requiring hospitalization and ADRs resulting in death.

Suggested Citation

  • Mary K. Olson, 2002. "Pharmaceutical Policy Change and the Safety of New Drugs," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 615-642.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/368006
    DOI: 10.1086/368006
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    References listed on IDEAS

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    1. Olson, Mary, 1996. "Substitution in Regulatory Agencies: FDA Enforcement Alternatives," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(2), pages 376-407, October.
    2. Mary K. Olson, 2000. "Regulatory Reform and Bureaucratic Responsiveness to Firms: the Impact of User Fees in the FDA," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(3), pages 363-395, June.
    3. Peltzman, Sam, 1987. "The Health Effects of Mandatory Prescriptions," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 207-238, October.
    4. Olson, Mary K, 1995. "Regulatory Agency Discretion among Competing Industries: Inside the FDA," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(2), pages 379-405, October.
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    Cited by:

    1. Chorniy, Anna & Bailey, James & Maloney, Michael & Civan, Abdulkadir, 2019. "Regulatory Review Time and Pharmaceutical R&D," Working Papers 06923, George Mason University, Mercatus Center.
    2. Andreas Schick & Kathleen L. Miller & Michael Lanthier & Gerald Dal Pan & Clark Nardinelli, 2017. "Evaluation of Pre-marketing Factors to Predict Post-marketing Boxed Warnings and Safety Withdrawals," Drug Safety, Springer, vol. 40(6), pages 497-503, June.
    3. Allan Begosh & John Goldsmith & Ed Hass & Randall W. Lutter & Clark Nardinelli & John A. Vernon, 2006. "Black Box Warnings and Drug Safety: Examining the Determinants and Timing of FDA Warning Labels," NBER Working Papers 12803, National Bureau of Economic Research, Inc.
    4. Niklas Rudholm, 2004. "Approval times and the safety of new pharmaceuticals," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 5(4), pages 345-350, November.
    5. Anna Chorniy & James Bailey & Abdulkadir Civan & Michael Maloney, 2021. "Regulatory review time and pharmaceutical research and development," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 113-128, January.
    6. Guy David & Sara Markowitz & Seth Richards-Shubik, 2010. "The Effects of Pharmaceutical Marketing and Promotion on Adverse Drug Events and Regulation," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 1-25, November.
    7. Light, Donald W. & Lexchin, Joel R., 2021. "Pharmaceuticals as a market for “lemons”: Theory and practice," Social Science & Medicine, Elsevier, vol. 268(C).
    8. Henry Grabowski & Y. Richard Wang, 2008. "Do Faster Food and Drug Administration Drug Reviews Adversely Affect Patient Safety? An Analysis of the 1992 Prescription Drug User Fee Act," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 377-406, May.
    9. Olson, Mary K., 2008. "The risk we bear: The effects of review speed and industry user fees on new drug safety," Journal of Health Economics, Elsevier, vol. 27(2), pages 175-200, March.
    10. Philipson, Tomas & Berndt, Ernst R. & Gottschalk, Adrian H.B. & Sun, Eric, 2008. "Cost-benefit analysis of the FDA: The case of the prescription drug user fee acts," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1306-1325, June.
    11. Abraham, John & Davis, Courtney, 2005. "A comparative analysis of drug safety withdrawals in the UK and the US (1971-1992): Implications for current regulatory thinking and policy," Social Science & Medicine, Elsevier, vol. 61(5), pages 881-892, September.
    12. W. David Bradford & Andrew N. Kleit, 2015. "Impact of FDA Actions, DTCA, and Public Information on the Market for Pain Medication," Health Economics, John Wiley & Sons, Ltd., vol. 24(7), pages 859-875, July.
    13. Olson, Mary K., 2004. "Are novel drugs more risky for patients than less novel drugs?," Journal of Health Economics, Elsevier, vol. 23(6), pages 1135-1158, November.

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