How changes in drug-safety regulations affect the way drug and biotech companies invest in innovation.

Changes in the economics of product development resulting from heightened safety regulations could have a sizable negative impact on drug and biotechnology companies' decisions about investing in innovation. We developed a model to compare the potential economic effects of pre- and postmarketing strategies to identify safety problems with new drugs. Although expanding Phase III clinical testing and postmarketing safety surveillance are not perfect substitutes, our findings suggest that even a large increase in funding for the latter will have a relatively small adverse impact on investment decisions by drug companies and venture capital firms, compared with the former.

Duke Scholars

Author Robert M. Califf Medicine, Cardiology

Author Shelby Derene Reed Population Health Sciences