Regulatory review time and pharmaceutical research and development

Area of Science:

• Health Economics
• Pharmaceutical Policy
• Drug Development

Background:

• Drug development involves lengthy review processes by regulatory bodies like the US Food and Drug Administration (FDA).
• Regulatory delays incur direct costs for pharmaceutical companies and patients awaiting new treatments.
• These delays can influence future research and development (R&D) strategies within the pharmaceutical industry.

Purpose of the Study:

• To quantify the impact of US Food and Drug Administration (FDA) regulatory review times on pharmaceutical R&D investment decisions.
• To estimate the relationship between FDA approval delays and the number of drugs in the development pipeline.

Main Methods:

• Matching data on drugs in the 2006 development pipeline with FDA approval times for drugs approved between 1999 and 2005.
• Utilizing a comprehensive set of control variables influencing drug R&D and regulatory review.
• Econometric analysis to determine the effect of review duration on R&D output.

Main Results:

• An average delay of three additional months in FDA review time is associated with one fewer drug in development within a specific therapeutic category.
• This finding indicates a significant negative relationship between regulatory lag and R&D pipeline size.
• Pharmaceutical firms appear unable to fully pass on the costs associated with regulatory delays to consumers.

Conclusions:

• The duration of the FDA regulatory review process significantly influences pharmaceutical companies' R&D strategies.
• Extended review times can lead to a reduction in the diversity and number of drugs entering the development pipeline.
• Economic implications suggest that regulatory efficiency is crucial for fostering innovation in drug development.