Dubois, Pierre, Gentry, Elissa and Tunçel, Tuba (2026) Strategic Submissions : An Analysis of Supplemental Drug Approvals. Journal of Economics and Management Strategy. (In Press)

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Abstract

Off-label use regulation has the potential to change pharmaceutical firms’ behavior
and—consequently—affect patient welfare. We investigate the impact of changes in
off-label regulation on pharmaceutical firms’ behavior in seeking formal marketing ap
proval for supplemental uses. In 2012, a US court decision protected truthful off-label
promotion, providing pharmaceutical companies more leeway to promote off-label uses
of their drug. Using a unique data set of pharmaceutical firms’ research and devel
opment projects, we exploit this regulatory change to understand how firms react to
government policies. Results demonstrate that the hazard of approval declined for
supplemental uses, relative to original uses, after the policy change. Patent protection,
potential market size, and competition are also important determinants of the hazard
of approval. These results have implications not only for innovation policy but for the
creation of high-quality data for certain indications.