Medical product information incentives and the transparency paradox

Research output: Contribution to journalReview article

7 Citations (Scopus)

Abstract

Recent allegations that essential safety and efficacy information is often suppressed by medical product manufacturers or poorly evaluated by regulators have led to calls for greater information transparency. The public is justifiably concerned that its ability to conduct an informed risk-benefit assessment of drugs and medical devices is compromised. Several changes have already been made to federal regulatory law and medical research policy to mandate greater disclosure and more changes are being considered. However, it is possible that these measures may backfire by enhancing significant tort-based economic disincentives for generating new information. In other words, greater disclosure requirements could, paradoxically, lead to less information production. The resulting shortfall could be extremely dangerous and have a detrimental effect on health care for years to come. This Article addresses the crisis on the horizon and proposes a unique solution that connects tort law disincentives to information production incentives. It explains why an economically rational company would be expected to respond to transparency with less information and proposes a tort liability limitation as a solution that will encourage a cost-internalizing company to increase information production. This Article also considers the impact of the PDA's recent position on preemption along with other regulatory enhancements and concludes that these are effective, but second-best solutions.

Original languageEnglish (US)
Pages (from-to)623-671
Number of pages49
JournalIndiana Law Journal
Volume82
Issue number3
StatePublished - Jun 1 2007

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transparency
incentive
Law
medical research
research policy
liability
health care
drug
ability
costs
economics

All Science Journal Classification (ASJC) codes

  • Law

Cite this

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abstract = "Recent allegations that essential safety and efficacy information is often suppressed by medical product manufacturers or poorly evaluated by regulators have led to calls for greater information transparency. The public is justifiably concerned that its ability to conduct an informed risk-benefit assessment of drugs and medical devices is compromised. Several changes have already been made to federal regulatory law and medical research policy to mandate greater disclosure and more changes are being considered. However, it is possible that these measures may backfire by enhancing significant tort-based economic disincentives for generating new information. In other words, greater disclosure requirements could, paradoxically, lead to less information production. The resulting shortfall could be extremely dangerous and have a detrimental effect on health care for years to come. This Article addresses the crisis on the horizon and proposes a unique solution that connects tort law disincentives to information production incentives. It explains why an economically rational company would be expected to respond to transparency with less information and proposes a tort liability limitation as a solution that will encourage a cost-internalizing company to increase information production. This Article also considers the impact of the PDA's recent position on preemption along with other regulatory enhancements and concludes that these are effective, but second-best solutions.",
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Medical product information incentives and the transparency paradox. / Cahoy, Daniel Robert.

In: Indiana Law Journal, Vol. 82, No. 3, 01.06.2007, p. 623-671.

Research output: Contribution to journalReview article

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N2 - Recent allegations that essential safety and efficacy information is often suppressed by medical product manufacturers or poorly evaluated by regulators have led to calls for greater information transparency. The public is justifiably concerned that its ability to conduct an informed risk-benefit assessment of drugs and medical devices is compromised. Several changes have already been made to federal regulatory law and medical research policy to mandate greater disclosure and more changes are being considered. However, it is possible that these measures may backfire by enhancing significant tort-based economic disincentives for generating new information. In other words, greater disclosure requirements could, paradoxically, lead to less information production. The resulting shortfall could be extremely dangerous and have a detrimental effect on health care for years to come. This Article addresses the crisis on the horizon and proposes a unique solution that connects tort law disincentives to information production incentives. It explains why an economically rational company would be expected to respond to transparency with less information and proposes a tort liability limitation as a solution that will encourage a cost-internalizing company to increase information production. This Article also considers the impact of the PDA's recent position on preemption along with other regulatory enhancements and concludes that these are effective, but second-best solutions.

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