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Do Important Drugs Reach the Market Sooner?

David Dranove and David Meltzer
The RAND Journal of Economics
Vol. 25, No. 3 (Autumn, 1994), pp. 402-423
Published by: Wiley on behalf of RAND Corporation
Stable URL: http://www.jstor.org/stable/2555769
Page Count: 22
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Do Important Drugs Reach the Market Sooner?
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Abstract

Since the Food and Drug Administration (FDA) Amendments of 1962, the average time from a drug's first worldwide patent application to its approval by the FDA has risen from 3.5 to 13.5 years. FDA policies and manufacturers' incentives suggest that more important drugs may have reached the market sooner. To test this, we develop measures of "time to approval" and "importance," and determine how the latter affects the former. Our results indicate that more important drugs are developed and approved more rapidly than less important drugs. These results imply that the costs of approval lags have probably been overstated and challenge estimates of the returns to research and development in the pharmaceutical industry.

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