Off-Label Innovation

Modern medicine faces many significant problems. This Article is about two of them. The first is that approved drugs have many potential therapeutic uses that are never identified, investigated, or developed. The second is the routine practice of physicians prescribing approved drugs for unapproved uses—so-called “off-label” uses. These problems seem very different. Failure to invest in potential new uses is an innovation problem: firms lack incentives to research and develop new uses of old drugs. The problem of off-label uses, on the other hand, is one of safety and efficacy: off-label uses are risky because they are not supported by the same level of evidence as approved uses. While descriptively accurate, this is not the only accurate description. Each of these problems is also one of information—a lack of information about the safety and efficacy of prescribing approved drugs for unapproved uses. Because all new uses of approved drugs are off-label uses, gathering safety and efficacy information about off-label uses, in effect, produces safety and efficacy information about many new uses. Not only that, but some off-label uses may be new: physicians may innovate by prescribing drugs off-label. Reframing these two seemingly disparate problems in terms of a common information deficit enables a single, information-based solution. This solution—which draws on the existing suite of innovation policy levers—incentivizes providers, rather than pharmaceutical companies, to generate the post-market information needed to address both problems.