Enhancing Regulatory Decision-Making for Postmarket Drug Safety

Management Science (forthcoming)

SMU Cox School of Business Research Paper No. 20-05

49 Pages Posted: 3 Jan 2016 Last revised: 12 Mar 2021

See all articles by Vishal Ahuja

Vishal Ahuja

Southern Methodist University (SMU) - Information Technology and Operations Management Department (ITOM)

Carlos Alvarez

Texas Tech University - Health Science Center

John R. Birge

University of Chicago - Booth School of Business

Chad Syverson

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Date Written: July 29, 2020

Abstract

The U.S. Food and Drug Administration (FDA) regulates the approval and safe public use of pharmaceutical products in the United States. The FDA uses postmarket surveillance systems to monitor drugs already on the market; a drug found to be associated with an increased risk of adverse events (ADEs) is subject to a recall or a warning. A flawed postmarket decision-making process can have unintended consequences for patients; creates uncertainty among providers and affect their prescribing practices; and subjects the FDA to unfavorable public scrutiny. The FDA’s current pharmacovigilance process suffers from several shortcomings (for example, a high under-reporting rate), often resulting in incorrect or untimely decisions. Thus, there is a need for robust, data-driven approaches to support and enhance regulatory decision-making in the context of postmarket pharmacovigilance. We propose such an approach. Our empirical approach has several appealing features - it employs large, reliable, and relevant longitudinal databases; it uses methods firmly established in literature; and it addresses selection bias and endogeneity concerns. Our approach can used to both (i) independently validate existing safety concerns relating to a drug, such as those emanating from existing surveillance systems; and (ii) perform a holistic safety assessments by evaluating a drug's association with other ADEs to which the users may be susceptible. We illustrate the utility of our approach by applying it retrospectively to a highly publicized FDA black box warning for rosiglitazone, a diabetes drug. Using comprehensive data from the Veterans Health Administration on more than 320,000 diabetes patients over an eight-year period, we find that the drug was not associated with the two ADEs that led to the BBW, a conclusion that the FDA evidently reached as it retracted the warning six years after issuing it. We demonstrate the generalizability of our approach by retroactively evaluating two additional warnings, those related to statins and atenolol, which we found to be valid.

Keywords: Pharmaceutical regulation; Decision-making; Healthcare; Diabetes.

JEL Classification: C33, I18, L15

Suggested Citation

Ahuja, Vishal and Alvarez, Carlos and Birge, John R. and Syverson, Chad, Enhancing Regulatory Decision-Making for Postmarket Drug Safety (July 29, 2020). Management Science (forthcoming), SMU Cox School of Business Research Paper No. 20-05, Available at SSRN: https://ssrn.com/abstract=2709881 or http://dx.doi.org/10.2139/ssrn.2709881

Vishal Ahuja (Contact Author)

Southern Methodist University (SMU) - Information Technology and Operations Management Department (ITOM) ( email )

Dallas, TX 75275
United States

Carlos Alvarez

Texas Tech University - Health Science Center ( email )

Lubbock, TX
United States

John R. Birge

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chad Syverson

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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