Prediction market event contracts for both clinical drug trials and Food and Drug Administration regulatory approvals are attracting the attention of two Democratic senators, according to a letter first obtained by CNBC.
Sens. Angela Alsobrooks, D-Md., and Ron Wyden, D-Ore., expressed concerns about related event contracts in a letter Wednesday to Health and Human Services Secretary Robert F. Kennedy Jr. The senators asked what steps HHS has taken to mitigate risks that may arise from the market.
“Allowing individuals to bet on the success of these trials and drugs undermines the scientific process, creates perverse incentives for researchers, harms trial participants, and can lead to dangerous medical outcomes for countless Americans,” the senators wrote.
Albrooks and Wyden reiterated concerns raised by some medical experts that the market could change patients’ minds when considering whether to participate in a clinical trial, and expressed concern about potential insider trading risks from researchers and regulators who may have access to nonpublic information.
communication request
The senators asked HHS to provide all internal communications regarding employee participation in prediction markets related to matters within the department’s jurisdiction. They also requested all communications between the department and the prediction market platforms themselves, the Commodity Futures Trading Commission, which regulates event contracts, and internal analyzes conducted regarding the potential impact on the market.
“HHS, FDA, and the (National Institutes of Health) must maintain the integrity of the drug development process and maintain public trust in public health by putting in place essential guardrails to prevent individuals from profiting from the success and approval of the medicines on which the American people depend,” Allbrooks and Wyden said in the letter.
Both leading prediction market platforms, Kalshi and Polymarket, offer contracts, but in the case of Polymarket, the market can only be found on international exchanges that are not regulated in the United States.
Kalsi said when it launched related markets in July, it put in place guardrails to limit trading risks, including only allowing markets related to late-stage trials. Mr Kalsi also promised to list contracts only after trial registration is completed and to use employee authentication technology for all traders participating in the market.
“Drug development is one of the most important and most information-constrained industries on the planet,” Karshi CEO Tarek Mansour said in July. “The data that determines which drugs make progress and which don’t is all too often kept out of the hands of the people who need it. Bringing the information to the surface is Calci’s purpose, and we’re committed to getting it right.”
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
