Sadly this paper makes a small mistake. The effect they’ve found, the causes, yes, all fine. It’s the description of the regulatory change which is wrong. Their statement is that regulation can increase investment. Nope, that’s not what is being shown here. Rather, standard regulation was such that orphan rugs could not attract investment. Allowing orphan drugs a lighter regulatory regime increased investment. It’s less investment here increasing investment.
At which point, just think how much more we could do with less regulation overall:
Moving beyond the valley of death: Regulation and venture capital investments in early-stage biopharmaceutical firms
Yujin Kim, Chirantan Chatterjee, Matthew J.…