The Clinical Trial Research Participant as an Inside Trader: A Legal and Policy Analysis

42 Pages Posted: 10 Oct 2009

Date Written: December 1, 2006


This Article examines whether a participant in a clinical research trial for a drug obtains material nonpublic information about the drug and its manufacturer or licensor and, if so, whether the participant may lawfully trade securities based on that information. This issue has been noted but not examined in depth in several articles in recent years. After an introduction to the federal law of insider trading and a discussion of relevant aspects of a supervised research trial, the Article concludes that, absent an agreement to the contrary, the participant would be free to trade securities based on any material nonpublic information learned in the trial. The author evaluates the extent to which the information is material and nonpublic and then presents the policy issues surrounding whether the participant should be precluded from trading when in possession of material nonpublic information gained as a result of participation in the trial. While not resolving the competing policy considerations, including the value of allowing participants to make disclosure of their experiences in the trial before publication of the results in a peer reviewed journal, the Article presents an approach for preventing the misuse of material nonpublic information gained in the clinical trial context, by obtaining an agreement from the participant, and an agreement from the limited circle of persons to whom the participant should be allowed to make disclosure in any event (such as his personal physician and family members), that would render any trading by them unlawful under the federal law of insider trading.

Keywords: insider trading, Rule 10b-5, duties of clinical investigator, duties of patient

JEL Classification: K30, K32, K10

Suggested Citation

Horwich, Allan, The Clinical Trial Research Participant as an Inside Trader: A Legal and Policy Analysis (December 1, 2006). Journal of Health Law, Vol. 39, No. 1, 2006, Northwestern Law & Econ Research Paper No. 09-39, Available at SSRN:

Allan Horwich (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

Schiff Hardin LLP ( email )

6600 Sears Tower
Chicago, IL 60606-6473
United States

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