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Regulatory Incentives for Innovation: The FDA's Breakthrough Therapy Designation

Author

Listed:
  • Amitabh Chandra
  • Jennifer Kao
  • Kathleen L. Miller
  • Ariel D. Stern

Abstract

Regulators of new products confront a tradeoff between speeding a new product to market and collecting additional product quality information. The FDA’s Breakthrough Therapy Designation (BTD) provides an opportunity to understand if a regulator can use new policy to innovate around this tradeoff—i.e., whether it improved regulator productivity by allowing products to come to market more quickly without compromising quality. We find that the BTD program shortened clinical development times by 23 percent and did not impact the ex post safety profile of drugs with the designation. In exploring mechanisms, we find that the BTD program had the greatest impact on less experienced firms and was associated with reduced BTD clinical trial design complexity. The results suggest that targeted regulatory innovation can shorten R&D periods without compromising the quality of new products.

Suggested Citation

  • Amitabh Chandra & Jennifer Kao & Kathleen L. Miller & Ariel D. Stern, 2022. "Regulatory Incentives for Innovation: The FDA's Breakthrough Therapy Designation," NBER Working Papers 30712, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30712
    Note: EH LE
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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