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Fall 2005

ISSN 0890-913X

Volume 21, Number 1

Categories: Politics | Fall 2005

Insider Trading Around New Drug Approvals

Todd A. Finkle, The University of Akron

Laurence E. Blose, Grand Valley State University

Reinhold P. Lam, The University of North Florida

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JournalofPrivateEntoprise,VolumeXXI,Fall2005InsiderTradingAroundNewDrugApprovalsToddA.FinkleTheUniversityofAkronLaurenceE.BloseGrandValleyStateUniversityReinholdP.LambTheUniversityofNorthFloridaThisstudyexaminesthemarketreactiontonewdrugapprovalannouncementsbytheFoodandDrugAdministration(FDA).AccordingtotheTuftsCenterfortheStudyofDrugDevelopment(2001a),theaveragecosttodevelopanewdrugis$802millionandthetypicaltimeframebeforeitteachesthemarketis10-15years.AnewdrugthatobtainsFDAapprovaltobemarketedtothepubliccancontributebillionsofdollarstothemanufacturingpharmaceutical.Forexample,in1998,theanti-ulcerdrugPrilosecgeneratedover$4.0billioninsalesforAstraPharmaceutical.Zocor,acholesterolreducer,contributedover$2.8billiontoMerck,andClaritin,ananti-allergydrugmanufacturedbyWarner-Lambert,producedsalesofmorethan$1.3billion.Salesfortheentireindustryexceeded$102billion,andprofitsgrewbyalmost18%—fourtimesthatoftheaverageFortune500firm(Tanouye,1998).NewDrugApprovalProcessPriortomarketing,thesedrugs,whichemanatefromthepharmaceuticalandbiotechnologyindustries,mustgothrougharigorousapprovalprocesswiththeFDAthatincludespre-clinicaltestingandseveralstagesofclinicaltrials.Inordertoassesssafety,newdrugsmustundergopreclinicaltestinginanimals.ThefindingsoftheseToddA.Finkle,LaurenceE.Blose,ReinholdPLamb29

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Metadata [hide]

Title	Insider Trading Around New Drug Approvals
Authors/Creators:	Todd A. Finkle, The University of Akron Laurence E. Blose, Grand Valley State University Reinhold P. Lam, The University of North Florida
Year:	2005
Volume:	21
Number:	1
Pages:	29 - 45
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Insider trading, Drugs, Federal Drug Association, Government policy

Citation:
Finkle, Todd A.; Blose, Laurence E.; Lam, Reinhold P. / 2005. "Insider Trading Around New Drug Approvals." The Journal of Private Enterprise, 21(1): 29-45.