Why Do Bigger Firms Receive Faster Drug Approvals?

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Why Do Bigger Firms Receive Faster Drug Approvals?

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Title: Why Do Bigger Firms Receive Faster Drug Approvals?
Author: Carpenter, Daniel Paul; Feinstein, Brian; Moore, Colin; Turenne, Marc; Yohai, Ian; Zucker, Evan James

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Citation: Carpenter, Daniel Paul, Brian Feinstein, Colin Moore, Marc Turenne, Ian Yohai, and Evan James Zucker. 2004. Why do bigger firms receive faster drug approvals? Working Paper, Department of Government, Harvard University.
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Abstract: We test several explanations for the commonly observed pattern that larger firms receive shorter FDA approval times for the drugs they submit. Candidate explanations include capture and rent-seeking and “external-signals” accounts. Analyses of 766 new molecular entities submitted to the FDA from 1979 to 2000 suggest that large-firm advantage in pharmaceutical regulation is primarily due to two factors: (1) enhanced regulator familiarity with large firms by virtue of their submission histories (an effect augmented when firms merge), and (2) regulatory favor for “early entrants” to a disease market, which is induced from disease-specific consumer pressure for approvals. Our analyses show that as much as 70% of observed large-firm advantage in expected FDA approval times can be attributed to these factors, 30-55% to familiarity alone. We find no consistent support for rent-seeking or “political clout” explanations.
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Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:33901522
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