An Empirical Review of Major Legislation Affecting Drug Development: Past Experiences, Effects, and Unintended Consequences


Aaron S. Kesselheim, Division of Pharmacoepidemiology and Pharmacoeconomics, 1620 Tremont St., Suite 3030, Boston, MA 02120 (email:


Context: With the development of transformative drugs at a low point, numerous commentators have recommended new legislation that uses supplementary market exclusivity as an incentive to promote innovation in the pharmaceutical market.

Methods: This report provides an historical perspective on proposals for encouraging drug research. Four legislative programs have been primarily designed to offer market exclusivity to promote public health goals in the pharmaceutical or biomedical sciences: the Bayh-Dole Act of 1980, the Orphan Drug Act of 1983, the Hatch-Waxman Act of 1984, and the pediatric exclusivity provisions of the FDA Modernization Act of 1997. I reviewed quantitative and qualitative studies that reported on the outcomes from these programs and evaluated the quality of evidence generated.

Findings: All four legislative programs generally have been regarded as successful, although such conclusions are largely based on straightforward descriptive reports rather than on more rigorous comparative data or analyses that sufficiently account for confounding. Overall, solid data demonstrate that market exclusivity incentives can attract interest from parties involved in drug development. However, using market exclusivity to promote innovation in the pharmaceutical market can be prone to misuse, leading to improper gains. In addition, important collateral effects have emerged with substantial negative public health implications.

Conclusions: Using market exclusivity to promote pharmaceutical innovation can lead to positive outcomes, but the practice is also characterized by waste and collateral effects. Certain practices, such as mechanisms for reevaluation and closer ties of incentives programs to public health outcomes, can help address these problems.