Pushing for speed or scope? Pharmaceutical lobbying and Food and Drug Administration drug review

摘要

Research SummaryWe argue firms implementing political activities face a fundamental tradeoff between the content and the speed of public officials' decisions. Firms can use their political capital to speed up public officials' decisions at the expense of less customized content, or to push for more tailored content at the expense of speed. How do firms respond to this tradeoff? We argue firms' nonmarket strategies are determined by their market environment: they will push for content or speed depending upon the level of competitive pressures they face in the market. In the presence of high market pressures, firms are more likely to push for speed; whereas firms facing low market pressures are more likely to push for customized content.Managerial SummaryWe show evidence of a tradeoff between content and speed in the political arena looking at Food and Drug Administration (FDA) drug approvals: lobbying for broader drugs leads to longer revisions, whereas lobbying to speed up the review process leads to narrower drugs. We explore how firms respond to this tradeoff in a sample of 540 new drug applications to the FDA from 1998 to 2015. We show firms' lobbying strategies depend upon the level of intellectual property (IP) protection behind their drugs: firms with high levels of IP protection are more likely to lobby for drug scope, whereas firms with low levels of IP protection are more likely to lobby for revision speed.