Tamar Oostrom

Assistant Professor
Department of Economics
Ohio State University

Title: Funding of Clinical Trials and Reported Drug Efficacy

Abstract:

This paper estimates the effect of financial sponsorship of clinical trials on reported drug efficacy, leveraging the insight that the exact same sets of drugs are often compared in different randomized control trials conducted by parties with different financial interests. I use newly assembled data on psychiatric clinical trials to estimate that a drug appears substantially more effective when the trial is sponsored by that drug's manufacturer, compared with the same drug in the same set of drugs but without the drug manufacturer's involvement. This difference is not explained by observable characteristics of trial design. Publication bias is a key mechanism and pre-registration requirements may be effective in overcoming sponsorship bias.