Speculating on Science: Kalshi Launches Clinical Trial & FDA Prediction Markets

Kalshi, a regulated prediction market exchange, has launched a pilot program that allows users to bet on the outcomes of clinical trials and Food and Drug Administration (FDA) regulatory decisions. 

According to Kalshi, the new prediction market aims to create a transparent, evidence-based “probability score” for clinical and regulatory events. To ensure outcomes are evaluated objectively, Kalshi has partnered with AppliedXL, a public intelligence company that tracks pharmaceutical data.

Before a market opens, AppliedXL establishes which official government document will be used to determine the outcome of the trade. These sources include FDA approval letters, FDA advisory committee voting records, or pre-registered primary endpoints on ClinicalTrials.gov. 

To address ethical concerns and insider-trading risks tied to health care outcomes, Kalshi has established 3 safeguards for this pilot program:

• Trading will be restricted to only late-stage trials due to their well-defined, publicly available primary endpoints.
• Markets will open only after patient enrollment has closed to ensure that physician referrals and recruitment practices are not influenced by trading activity.
• Employment verification will be enforced for all participants to maintain market integrity. This ensures that individuals with access to nonpublic information, such as trial investigators, cannot trade on the scientific outcomes of the studies they are spearheading. 

Despite these safeguards, the pilot program has drawn skepticism from the medical community. As reported by Stat News, some researchers and health care providers have raised concerns about allowing the public to trade on pharmaceutical developments, warning that prediction markets in the health care sector could carry serious repercussions.