The effect of RCTs on drug demand: Evidence from off-label cancer drugs

Abstract

This paper investigates the effect of scientific information from randomized controlled clinical trials (RCTs) on the demand for off-label uses of cancer drugs. This is a unique setting where demand for a drug for a specific use is observable both before and after the first RCT results are released. Using variation in the timing of RCTs across off-label uses of drugs, I find that demand responds asymmetrically to the trial results based on the statistical significance of the clinically relevant endpoint. When this endpoint is statistically significant, there is a large and immediate increase in demand. When this end point is not statistically significant, physicians are relatively slow to abandon use of the drug.