The Effect of RCTs on Demand for Off-Label Cancer Drugs

This paper investigates the role of randomized controlled clinical trials in the demand for cancer drugs. The unique setting of off-label prescribing, where it is possible to observe demand for a drug for a particular cancer both before and after a trial result is released, is used. A new data set combining information from scientific articles, FDA data, and Medicare claims data is constructed to estimate the effect of the release of a randomized controlled trial (RCT) on demand for off-label uses of a drug. Using variation in the timing of RCTs across off-label uses of drugs, the results show that demand for an off-label use of a drug increases on average by 85% if the RCT for that use of the drug shows a statistically significant increase in overall survival. In contrast, there is no statistically significant change in the absolute level of demand if the trial result is inconclusive. Evidence from RCTs has an important role in the extent to which new uses of drugs are adopted.