FDA Prediction Markets Could Undermine Reviews, Trials: Researchers
The growing use of online prediction markets Kalshi and Polymarket to wager on clinical trial outcomes and FDA drug approvals could compromise trial integrity, encourage insider trading, and undermine public confidence in regulatory decisions, three Boston University researchers warned.
Kalshi launched a pilot program in July (see earlier story) allowing traders to buy and sell contracts tied to the outcomes of late-stage clinical trials and FDA regulatory decisions, creating what the company says will be the first publicly available, continuously updated probabilities for drug development milestones. But a 10/13 commentary published in the Bulletin of the Atomic Scientists has researchers questioning whether the potential transparency benefits of pharmaceutical prediction markets outweigh the risks to patients and drug development.
The researchers warned that market predictions could influence trial participants' expectations, potentially affecting adherence, dropout rates and reported outcomes. They also raised concerns that pharmaceutical companies might select less demanding trial endpoints or abandon promising development programs in response to unfavorable market sentiment.
Another concern involves access to confidential clinical trial data. Individuals with advance knowledge of study results or regulatory developments could potentially profit from wagers before the information becomes public, the authors contend.
According to Kalshi, publicly traded prediction contracts could provide investors, drug developers, clinicians and patients with a transparent, market-based assessment of a therapy's probability of success rather than relying solely on company press releases or analyst reports. The company has established safeguards, including restrictions on trading by trial participants, investigators and sponsor employees.
However, the researchers questioned whether those restrictions adequately cover subcontractors and others with access to nonpublic information. They also warned that speculative trading or allegations of insider dealing could undermine confidence in FDA approval decisions, particularly for vaccines and other politically sensitive products.
“(W)hat if anti-vaccine activists aggressively bet against a new inoculation to undermine confidence in it?” the researchers asked. “As a result, a vaccine widely expected not to be deemed safe and effective in clinical trials (or for which significant doubt existed) that turns out to be effective might be viewed as having been improperly evaluated or approved. Such a consequence could exacerbate fears about vaccine safety and efficacy. The second concern is about how the public might respond to allegations of insider trading, raising the specter that some will perceive that federal regulators have a financial incentive to approve drugs that don’t pass muster.”
Rather than relying on prediction markets to improve transparency, the authors advocated stronger enforcement of clinical trial reporting requirements and broader public disclosure of trial endpoints and results.