In a new article on The Conversation, University of Canterbury’s Associate Professor Jeremy Clark and Professor Jedrej Bialkowski look at how regulators must get the balance right between encouraging new drug creation and safeguarding public health.
The race by pharmaceutical companies to find effective vaccines for COVID-19 has shone a global spotlight on the trade-offs regulators face in approving new drugs.
Under the system used by drug regulators in the US, Europe and elsewhere, drug companies need only show from clinical trials that new drugs have short-term safety and efficacy in order to gain approval.
So, what happens if something goes wrong longer term?
Specifically, does the market itself punish drug companies when regulators issue warnings about a product’s safety, or withdraw it entirely? Our latest research set out to answer that question.
Warnings after the fact
Companies don’t need to demonstrate a drug’s long-term safety and efficacy. The limited length of clinical trials is allowed in order to keep the cost of developing drugs from being so high that new drugs don’t get developed.
There are also ethical problems with long trials – would you like to spend three years randomly assigned to take a drug you quickly realise is ineffective, or worse?
But our system brings the risk that new drugs can turn out to cause long-term problems undetected at the time of approval – opioid pain killers being a prime example.
Instead, after a drug gets approved, doctors or patients can report “adverse drug events” which regulators can investigate. The regulators may issue a new warning to go on a drug’s label or, in extreme cases, the drug may be withdrawn from the market, as happened with the painkiller Vioxx in 2004.
Regulation versus market signals
New safety warnings can vary in seriousness, with examples in our sample ranging from risk of permanent skin discolouration from certain dermal patches, up to increased risk of potentially fatal heart or liver damage, or suicidal ideation.
In the US, the Food and Drug Administration (FDA) therefore further distinguishes between new regular warnings and more serious “boxed” warnings that are urgent enough to be framed and placed at the top of a drug’s information label.
Do regulators get the balance right between encouraging new drug creation and safeguarding public health from unforeseen problems with newly approved drugs?
The burden would not fall on regulators alone if markets tended to “punish” companies whose drugs turn out to cause longer-term problems. This would create additional market incentives for companies to avoid such outcomes.
So do markets help keep us safe when we take approved drugs?
Testing the market
We first tested how total sales volumes of individual drugs across four broad categories in the US and the UK hospital and retail sectors are affected when each country’s respective regulator issues new safety warnings.
Some of these drugs were sold by only one or two companies, while others were sold by many, but we focused on whether warnings significantly affected total sales of individual drugs.
We included individual drugs across the four drug categories of diabetes, analgesic pain relievers (including opioids), nervous system analeptics for calming (including antipsychotics), and nervous system psychoanaleptic stimulants (including antidepressants).
Beyond asking whether warnings affected total sales volumes of individual drugs, we next tested whether they affected the share price of the individual publicly listed companies selling the drug, in the days surrounding the announcement of the safety warning.
