The long drug approval process in the United States imposes significant development costs on firms and delays access for patients, especially when a therapy that addresses a condition with no existing treatments shows early promise. To shorten approval timelines, the Food and Drug Administration (FDA) has instituted expedited pathways that are designed to bring the most promising therapies to patients more quickly. In this paper, we study the safety implications of the newest of the four expedited pathways: The Breakthrough Therapy Designation (BTD) program. We also examine the effectiveness of Risk Evaluation and Mitigation Strategies (REMS) and the Boxed Warnings (BW)—two pharmacovigilance tools that the FDA uses to mitigate the safety risks. To conduct our study, we compile a unique dataset of 327 drugs approved by the FDA between 2012 and 2019. We measure drug safety as the number of serious adverse events associated with a drug in a year. Results from the instrumental variable analysis show that BTD drugs incur 1,722 additional serious adverse events in a year (equivalent to 2.7 times the average annual serious adverse events) compared to non-BTD drugs. We find that REMS substantially reduces this safety gap, but BW does not. Specifically, BTD drugs with REMS record 875 fewer serious adverse events per year than BTD drugs without REMS. By revealing the BTD program’s detrimental effects on drug safety and showing which pharmacovigilance tools effectively mitigate these hazards, we contribute to quality and new product development literatures, and provide actionable guidance to policymakers. We propose that the FDA should consider requiring REMS for all drugs approved with BTD status.
AdbiALiuXMishraA (2022) Technology licensing and productivity growth: Evidence from manufacturing firms in developing economies. Manufacturing & Service Operations Management24(1): 214–234.
2.
AhujaVAlvarezCABirgeJR, et al. (2021) Enhancing regulatory decision making for postmarket drug safety. Management Science67(12): 7493–7510.
3.
AlkabbaniWPelletierRBeazelyMA, et al. (2022) Drug–drug interaction of the sodium glucose co-transporter 2 inhibitors with statins and myopathy: A disproportionality analysis using adverse events reporting data. Drug Safety45(3): 287–295.
4.
AnandGGrayJSiemsenE (2012) Decay, shock, and renewal: Operational routines and process entropy in the pharmaceutical industry. Organization Science23(6): 1700–1716.
AndererABastaniHSilberholzJ (2022) Adaptive clinical trial designs with surrogates: When should we bother?Management Science68(3): 1982–2002.
7.
BallGSiemsenEShahR (2017) Do plant inspections predict future quality? the role of investigator experience. Manufacturing & Service Operations Management19(4): 534–550.
8.
BayusBL (1997) Speed-to-market and new product performance trade-offs. Journal of Product Innovation Management14(6): 485–497.
9.
BendolyEChaoRO (2016) How excessive stage time reduction in NPD negatively impacts market value. Production and Operations Management25(5): 812–832.
10.
BhaskaranSRKrishnanV (2009) Effort, revenue, and cost sharing mechanisms for collaborative new product development. Management Science55(7): 1152–1169.
11.
BrownDGWobstHJKapoorA, et al. (2022) Clinical development times for innovative drugs. Nature reviews. Drug discovery21(11): 793–794.
12.
ChambersJDThoratTWilkinsonCL, et al. (2017) Drugs cleared through the FDA’s expedited review offer greater gains than drugs approved by conventional process. Health Affairs36(8): 1408–1415.
13.
ChandraAKaoJMillerKL, et al. (2024) Regulatory incentives for innovation: The FDA’s breakthrough therapy designation. Review of Economics and Statistics1–46.
14.
CohenMAEliasbergJHoTH (1996) New product development: The performance and time-to-market tradeoff. Management Science42(2): 173–186.
15.
CohenMAEliashbergJHoTH (2000) An analysis of several new product performance metrics. Manufacturing & Service Operations Management2(4): 337–349.
16.
DarrowJJAvornJKesselheimAS (2014) New FDA breakthrough-drug category–implications for patients. New England Journal of Medicine370(13): 1252–1258.
17.
DarrowJJAvornJKesselheimAS (2018) The FDA breakthrough-drug designation–four years of experience. New England Journal of Medicine378(15): 1444–1453.
18.
DarrowJJAvornJKesselheimAS (2020) FDA approval and regulation of pharmaceuticals, 1983-2018. JAMA323(2): 164–176.
19.
DiwasKCTerwieschC (2009) Impact of workload on service time and patient safety: An econometric analysis of hospital operations. Management Science55(9): 1486–1498.
20.
ElingKLangerakFGriffinA (2013) A stage-wise approach to exploring performance effects of cycle time reduction. Journal of Product Innovation Management30(4): 626–641.
21.
FrankCHimmelsteinDUWoolhandlerS, et al. (2014) Era of faster FDA drug approval has also seen increased black-box warnings and market withdrawals. Health Affairs33(8): 1453–1459.
22.
GarvinD (1987) Competing on the eight dimensions of quality. Harvard Business Review65(6): 101–109.
23.
GrayJVRothAVLeibleinMJ (2011) Quality risk in offshore manufacturing: Evidence from the pharmaceutical industry. Journal of Operations Management29(7-8): 737–752.
24.
HasfordJGoettlerMMunterK-H, et al. (2002) Physicians’ knowledge and attitudes regarding the spontaneous reporting system for adverse drug reactions. Journal of Clinical Epidemiology55(9): 945–950.
25.
HendricksKBSinghalVR (1997) Delays in new product introductions and the market value of the firm: The consequences of being late to the market. Management Science43(4): 422–436.
26.
HermosillaM (2021) Rushed innovation: Evidence from drug licensing. Management Science67(1): 257–278.
27.
HoT-HLimNRezaS, et al. (2017) Om forum–causal inference models in operations management. Manufacturing & Service Operations Management19(4): 509–525.
28.
HwangTJDarrowJJKesselheimAS (2017) The FDA’s expedited programs and clinical development times for novel therapeutics, 2012-2016. JAMA318(21): 2137–2138.
29.
KarimiAMishraANatarajanKV, et al. (2021) Managing commodity stock-outs in public health supply chains in developing countries: An empirical analysis. Production and Operations Management30(9): 3116–3142.
30.
KesselheimASWoloshinSEddingsW, et al. (2016) Physicians’ knowledge about FDA approval standards and perceptions of the “breakthrough therapy” designation. JAMA315(14): 1516–1518.
31.
KesslerEHChakrabartiAK (1996) Innovation speed: A conceptual model of context, antecedents, and outcomes. Academy of Management Review21(4): 1143–1191.
32.
KimS-HNetessineS (2013) Collaborative cost reduction and component procurement under information asymmetry. Management Science59(1): 189–206.
33.
KostamiVRajagopalanS (2014) Speed–quality trade-offs in a dynamic model. Manufacturing & Service Operations Management16(1): 104–118.
34.
KouvelisPMilnerJTianZ (2017) Clinical trials for new drug development: Optimal investment and application. Manufacturing & Service Operations Management19(3): 437–452.
35.
KrishnamurtiTWoloshinSSchwartzLM, et al. (2015) A randomized trial testing US food and drug administration “breakthrough” language. JAMA Internal Medicine175(11): 1856–1858.
36.
LangerakFJan HultinkE (2006) The impact of product innovativeness on the link between development speed and new product profitability. Journal of Product Innovation Management23(3): 203–214.
37.
LeeJLeeHSShinH, et al. (2021) Alleviating drug shortages: The role of mandated reporting induced operational transparency. Management Science67(4): 2326–2339.
38.
LiYLuLXLuSF, et al. (2022) The value of health information technology interoperability: Evidence from interhospital transfer of heart attack patients. Manufacturing & Service Operations Management24(2): 827–845.
39.
MorganLOMorganRMMooreWL (2001) Quality and time-to-market trade-offs when there are multiple product generations. Manufacturing & Service Operations Management3(2): 89–104.
40.
MukherjeeUKSinhaKK (2018) Product recall decisions in medical device supply chains: A big data analytic approach to evaluating judgment bias. Production and Operations Management27(10): 1816–1833.
41.
MurphySRobertsR (2006) “Black box” 101: How the Food and Drug Administration evaluates, communicates, and manages drug benefit/risk. Journal of Allergy and Clinical Immunology117(1): 34–39.
42.
NohIJGrayJBallG, et al. (2025) Are all generic drugs created equal? an empirical analysis of generic drug manufacturing location and serious drug adverse events. Production and Operations Management34(9): 2601–2617.
43.
OlsonMK (2008) the risk we bear: The effects of review speed and industry user fees on new drug safety. Journal of Health Economics27(2): 175–200.
44.
PagellMParkinsonMVeltriA, et al. (2020) The tension between worker safety and organization survival. Management Science66(10): 4863–4878.
45.
ParkMCarsonALContiRM (2025) Linking medication errors to drug shortages: Evidence from heparin supply chain disruptions caused by Hurricane Maria. Manufacturing & Service Operations Management27(4): 1008–1024.
46.
PhilipsonTBerndtERGottschalkAHB, et al. (2008) Cost-benefit analysis of the FDA: The case of the prescription drug user fee acts. Journal of Public Economics92(5-6): 1306–1325.
47.
PuthumanaJWallachJDRossJS (2018) Clinical trial evidence supporting FDA approval of drugs granted breakthrough therapy designation. JAMA320(3): 301–303.
48.
ReevesCABednarDA (1994) Defining quality: Alternatives and implications. Academy of Management Review19(3): 419–445.
49.
RosenbaumPRRubinDB (1983) The central role of the propensity score in observational studies for causal effects. Biometrika70(1): 41–55.
50.
RosenbergMSheehanSZhouE, et al. (2020) FDA postmarketing safety labeling changes: What have we learned since 2010 about impacts on prescribing rates, drug utilization, and treatment outcomes. Pharmacoepidemiology and Drug Safety29(9): 1022–1029.
51.
SandersonEWindmeijerF (2016) A weak instrument f-test in linear iv models with multiple endogenous variables. Journal of econometrics190(2): 212–221.
52.
SmithCM (2005) Origin and uses of primum non nocere–above all, do no harm!The Journal of Clinical Pharmacology45(4): 371–377.
53.
StaigerDOStockJH (1994) Instrumental variables regression with weak instruments.
54.
SwinkMTalluriSPandejpongT (2006) Faster, better, cheaper: A study of NPD project efficiency and performance tradeoffs. Journal of Operations Management24(5): 542–562.
55.
TalbotJ (2004) Stephens’ Detection of New Adverse Drug Reactions. Chichester, PA: Wiley Online Library.
56.
TatikondaMVMontoya-WeissMM (2001) Integrating operations and marketing perspectives of product innovation: The influence of organizational process factors and capabilities on development performance. Management Science47(1): 151–172.
57.
TianZHanWPowellWB (2022) Adaptive learning of drug quality and optimization of patient recruitment for clinical trials with dropouts. Manufacturing & Service Operations Management24(1): 580–599.
58.
TuckerAL (2004) The impact of operational failures on hospital nurses and their patients. Journal of Operations Management22(2): 151–169.
59.
WooldridgeJM (2010) Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT press.
60.
WuJJuhaeriJ (2016) The US food and drug administration’s risk evaluation and mitigation strategy (REMS) program–current status and future direction. Clinical Therapeutics38(12): 2526–2532.
61.
XiaSGongHZhaoY, et al. (2023) Tumor lysis syndrome associated with monoclonal antibodies in patients with multiple myeloma: A pharmacovigilance study based on the faers database. Clinical Pharmacology & Therapeutics114(1): 211–219.
62.
XuLZhaoHPetruzziNC (2021) Inducing compliance with postmarket studies for drugs under FDA’s accelerated approval pathway. Manufacturing & Service Operations Management23(1): 170–190.
63.
YılmazÖSonYShangG, et al. (2022) Causal inference under selection on observables in operations management research: Matching methods and synthetic controls. Journal of Operations Management.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
