Information Disclosure and Drug Development: Evidence from Mandatory Reporting of Clinical Trials

70 Pages Posted: 3 Oct 2019 Last revised: 30 Jun 2021

See all articles by Po-Hsuan Hsu

Po-Hsuan Hsu

National Tsing Hua University - Department of Quantitative Finance

Kyungran Lee

The University of Hong Kong - School of Business

S. Katie Moon

University of Colorado at Boulder - Leeds School of Business

Seungjoon Oh

Peking University - HSBC Business School

Date Written: May 4, 2021

Abstract

Using the Food and Drug Administration Amendments Act of 2007 (FDAAA) that requires drug developers to disclose detailed clinical study results publicly, we examine the effect of information disclosure on drug development. We find significantly more suspensions of new drug projects after the FDAAA with a causal interpretation based on difference-in-differences analyses. Further evidence supports peer learning as a mechanism for the increased suspensions after the FDAAA. We also analyze social welfare implications of enhanced information disclosure; while the FDAAA helps improve drug quality, it leads to more suspensions of potential new drugs that could have reduced mortality and morbidity.

Keywords: New Drugs, Mandatory Information Disclosure, Information Diffusion, Divestment, Welfare Analysis

JEL Classification: I18, G30, D80, O32

Suggested Citation

Hsu, Po-Hsuan and Lee, Kyungran and Moon, Katie and Oh, Seungjoon, Information Disclosure and Drug Development: Evidence from Mandatory Reporting of Clinical Trials (May 4, 2021). Available at SSRN: https://ssrn.com/abstract=3459511 or http://dx.doi.org/10.2139/ssrn.3459511

Po-Hsuan Hsu (Contact Author)

National Tsing Hua University - Department of Quantitative Finance ( email )

101, Section 2, Kuang-Fu Road
Hsinchu, Taiwan 300
China

Kyungran Lee

The University of Hong Kong - School of Business ( email )

Meng Wah Complex
Pokfulam Road
Hong Kong
China

Katie Moon

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Seungjoon Oh

Peking University - HSBC Business School ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
141
Abstract Views
906
rank
254,980
PlumX Metrics