“Inducing Compliance with Post-Market Studies for Drugs under FDA’s Accelerated Approval Pathway” by Dr. Hui Zhao
Dr. Hui Zhao
Associate Professor of Supply Chain Management
Department of Supply Chain and Information Systems
The Pennsylvania State University
In 1992, US Food and Drug Administration (FDA) instituted the accelerated approval pathway (AP), i.e., the fast track drug approval process, to encourage drug innovation, allowing promising drugs to enter the market based on limited evidence and requiring manufacturers to conduct post-market studies to verify the drugs’ true clinical benefits. However, up through now, most post-market studies are not completed due to many incentive issues and challenges FDA faces in managing AP, including information asymmetry and moral hazard. The prevalence of this non-compliance problem poses considerable public health risk and remains one of the difficult problems FDA faces. We address this problem by providing an internally consistent and implementable solution through a comprehensive analysis of the myriad complicating factors and tradeoffs facing FDA based on essentially a mechanism design framework. Using data for a real drug, we calibrate our model and quantify the value of our solution. We also discuss alternatives when such a solution mechanism is less effective. Interactions with FDA confirms the value we provide in increasing the viability and effectiveness of AP.