Prediction markets tied to clinical trials and drug approvals draw lawmakers' ire

Detailed summary

Sens. Angela Alsobrooks and Ron Wyden are asking what steps the Department of Health and Human Services has taken to mitigate risks from the markets.

Prediction market event contracts on both clinical drug trials and Food and Drug Administration regulatory approvals are drawing attention from two Democratic senators, according to a letter obtained first by CNBC.

Sen. Angela Alsobrooks, D-Md., and Sen. Ron Wyden, D-Ore., expressed concern over the related event contracts in a Wednesday letter to Department of Health and Human Services Secretary Robert F. Kennedy Jr. The senators asked what measures HHS has taken to mitigate any risks that may arise from the markets.

"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 could lead to dangerous medical outcomes for untold numbers of Americans," the senators wrote.

Alsobrooks and Wyden repeated concerns raised by some healthcare professionals that the markets could alter patient thinking when considering whether to participate in a trial and expressed concern over potential insider trading risks from researchers and regulators who may have access to nonpublic information.

The senators requested HHS provide all internal communication regarding staff participation in prediction markets tied to matters governed by the department. They also requested all communication between the department and the prediction market platforms themselves, the Commodity Futures Trading Commission — which regulates event contracts — and any internal analyses that have been done regarding the potential impact of the markets.

"HHS, FDA, and [the National Institutes of Health] must uphold the integrity of the drug development process and maintain public trust in the public health by putting essential guardrails in place to prevent individuals profiting on the success and approval of drugs that the American people depend on," Alsobrooks and Wyden said in the letter.

Both leading prediction market platforms, Kalshi and Polymarket, offer the contracts, although in Polymarket's…

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