Regulatory Advice and Novelty in Pharmaceutical Innovation

This study conducts the first quasi-experimental evaluation of the effectiveness of regulatory advice to stimulate novel medicine development. Medicine development is subject to pharmaceutical standards for safety, efficacy and quality, ultimately serving public safety interests. Novel medicine development, however, often requires non-standard trial designs, surrogate (pre-)clinical endpoints, and specific post-authorisation risk management plans. Stringency in pharmaceutical standards subsequently disincentivizes particularly novel medicine development due to elevated difficulties and costs to demonstrate adherence to safety/efficacy standards. We use data on medicines authorised in the EU, and show that the use of regulatory advice services, intended to aid generating robust evidence of medicine safety and efficacy, increases the propensity to develop and successfully bring to market novel medicines. Notably, we show that regulatory advice services are particularly relevant for inexperienced firms.