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Disclosure and the Pace of Drug Development

Author

Listed:
  • Colleen Cunnningham

    (University of Utah)

  • Florian Ederer

    (Boston University)

  • Charles Hodgson

    (Yale University)

  • Zhichun Wang

    (Yale University)

Abstract

Policies that mandate disclosure of innovative project outcomes aim to increase innovation by limiting wasteful duplicative innovation. Yet, such policies change not only the ex-post information environment but also firms' ex-ante innovation incentives. Firms may slow down their own innovation efforts in anticipation of increased disclosure by others. We examine the innovation-related impacts of the 2017 FDA Final Rule amendment, which mandates disclosure of clinical trial results for pharmaceutical firms. We show that the policy hastened and increased disclosure of results for clinical trials post-completion, but also increased the time to completion of clinical trials, the time between early phases of clinical trials, and delays in development-related investments. We provide evidence consistent with mandated disclosure leading firms to wait to learn from their competitors. Our results suggest that mandating disclosure may slow innovation when there is value to waiting.

Suggested Citation

  • Colleen Cunnningham & Florian Ederer & Charles Hodgson & Zhichun Wang, 2025. "Disclosure and the Pace of Drug Development," Cowles Foundation Discussion Papers 2465, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2465
    as

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    File URL: https://cowles.yale.edu/sites/default/files/2025-10/d2465.pdf
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    References listed on IDEAS

    as
    1. Emeric Henry, 2009. "Strategic Disclosure of Research Results: The Cost of Proving Your Honesty," Economic Journal, Royal Economic Society, vol. 119(539), pages 1036-1064, July.
    2. T. Robert Fetter & Andrew L. Steck & Christopher Timmins & Douglas Wrenn, 2018. "Learning by Viewing? Social Learning, Regulatory Disclosure, and Firm Productivity in Shale Gas," NBER Working Papers 25401, National Bureau of Economic Research, Inc.
    3. Charles Hodgson & Gregory Lewis, 2025. "You Can Lead a Horse to Water: Spatial Learning and Path Dependence in Consumer Search," Econometrica, Econometric Society, vol. 93(4), pages 1299-1332, July.
    Full references (including those not matched with items on IDEAS)

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