DO IMPORTANT DRUGS REACH THE MARKET SOONER

Since the Food and Drug Administration (FDA) Amendments of 1962, the a verage time from a drug's first worldwide patent application to its ap proval by the FDA has risen from 3.5 to 13.5 years. FDA policies and m anufacturers' incentives suggest that more important drugs may have re ached the market sooner. To test this, we develop measures of ''time t o approval'' and ''importance,'' and determine how the latter affects the former. Our results indicate that more important drugs are develop ed and approved more rapidly than less important drugs. These results imply that the costs of approval lags have probably been overstated an d challenge estimates of the returns to research and development in th e pharmaceutical industry.