Regulatory review time and pharmaceutical research and development

Anna Chorniy*, James Bailey, Abdulkadir Civan, Michael Maloney

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

In the United States, all newly developed drugs undergo a lengthy review process conducted by the US Food and Drug Administration (FDA). These regulatory delays have direct immediate costs for drug manufacturers and patients waiting for treatment. Under certain market conditions, regulatory delays may also affect future research and development (R&D) strategies of pharmaceutical companies. To estimate the magnitude of this effect, we match data on drugs in the development pipeline in 2006 to data that we collect on FDA review times for all drugs approved between 1999 and 2005. Employing a rich and novel set of controls that affect drug R&D decisions and, potentially, regulatory review lags, we find that on average, three additional months of delay result in one fewer drug in development in that drug category. Our results suggest that the length of the regulatory delay matters for pharmaceutical firms' R&D decisions and that the firms are likely unable to pass on these costs onto consumers.

Original languageEnglish (US)
Pages (from-to)113-128
Number of pages16
JournalHealth Economics (United Kingdom)
Volume30
Issue number1
DOIs
StatePublished - Jan 2021

Keywords

  • US Food and Drug Administration
  • drug development
  • pharmaceutical R&D
  • regulation

ASJC Scopus subject areas

  • Health Policy

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