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Eliminating the U.S. drug lag: Implications for drug safety

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  • Mary Olson

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Abstract

An increase in new drugs first launched in the U.S. and shorter lags between first global drug launch and U.S. approval indicate that the U.S. drug lag has declined. This paper examines the impact of these changes on drug safety using adverse drug reaction data for FDA-approved drugs in 1990 to 2004. Results show two different effects. First, drugs having longer U.S. launch lags (more foreign market experience) have fewer post approval drug risks compared to drugs with shorter launch lags. This result implies that foreign market experience prior to U.S. entry provides information to help alleviate drug-related risks for U.S. patients. Second, drugs that are first launched in the U.S. have fewer serious drug reactions compared to those that were first launched abroad. This result is surprising, and may suggest that first U.S. drug launch signals information about unobserved application quality, which translates into lower post approval drug risks. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Mary Olson, 2013. "Eliminating the U.S. drug lag: Implications for drug safety," Journal of Risk and Uncertainty, Springer, vol. 47(1), pages 1-30, August.
  • Handle: RePEc:kap:jrisku:v:47:y:2013:i:1:p:1-30
    DOI: 10.1007/s11166-013-9169-5
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    File URL: http://hdl.handle.net/10.1007/s11166-013-9169-5
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    References listed on IDEAS

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    1. 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.
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    3. 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.
    4. Peltzman, Sam, 1973. "An Evaluation of Consumer Protection Legislation: The 1962 Drug Amendments," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1049-1091, Sept.-Oct.
    5. Margaret K. Kyle, 2006. "The role of firm characteristics in pharmaceutical product launches," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 602-618, September.
    6. Margaret K. Kyle, 2007. "Pharmaceutical Price Controls and Entry Strategies," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 88-99, February.
    7. 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.
    8. Grabowski, Henry G & Vernon, John M & Thomas, Lacy Glenn, 1978. "Estimating the Effects of Regulation on Innovation: An International Comparative Analysis of the Pharmaceutical Industry," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 133-163, April.
    9. 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.
    10. Tomas J. Philipson & Eric Sun, 2008. "Is the Food And Drug Administration Safe And Effective?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 85-102, Winter.
    11. Mary K. Olson, 1997. "Firm Characteristics and the Speed of FDA Approval," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 377-401, June.
    12. 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.
    13. 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.
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    Cited by:

    1. W. Kip Viscusi & Richard J. Zeckhauser, 2015. "Regulating Ambiguous Risks: The Less than Rational Regulation of Pharmaceuticals," The Journal of Legal Studies, University of Chicago Press, vol. 44(S2), pages 387-422.

    More about this item

    Keywords

    Drug safety; Drug approval; Drug lag; I18; L51;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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