Sens. Angela Alsobrooks of Maryland and Ron Wyden of Oregon are asking Health and Human Services Secretary Robert F. Kennedy Jr. to explain what the department is doing to contain the risks of prediction markets that let traders wager on clinical drug trials and on Food and Drug Administration decisions. The two Democrats made the request in a letter dated Wednesday, Nov. 11.
In the letter, the senators wrote that letting people bet on whether trials and drugs succeed undercuts the scientific process, creates perverse incentives for researchers, harms people enrolled in studies and could lead to dangerous medical outcomes for large numbers of Americans.
Their concerns center on event contracts that pay out according to whether a trial reaches a particular result or whether the FDA grants or withholds approval for a treatment. Alsobrooks and Wyden repeated worries voiced by some health care professionals that prices on such markets could shape how patients think when they are deciding whether to join a study. They also pointed to insider trading risk, noting that researchers and regulators may hold nonpublic information about interim results, trial timing or pending regulatory decisions.
Document requests
The senators asked HHS to hand over all internal communications about staff participation in prediction markets tied to matters the department governs. They also requested all correspondence between the department and the prediction market platforms, all communications with the Commodity Futures Trading Commission — the agency that regulates event contracts — and any internal analyses the department has produced on how the markets could affect its work.
Alsobrooks and Wyden wrote that HHS, the FDA and the National Institutes of Health must safeguard the integrity of drug development and preserve public confidence in public health by installing essential guardrails, so that no one can profit from the success or approval of medicines that Americans rely on.
Kalshi points to its safeguards
Kalshi and Polymarket, the two leading prediction market venues, both offer contracts of this kind. Polymarket’s versions appear only on its international exchange, which is not regulated in the United States.
Kalshi, which lists the contracts domestically, said when it launched the markets in July that it had built in guardrails aimed at limiting trading risk. The company limited listings to late-stage trials, committed to posting contracts only after a trial had completed enrollment, and said it would apply employee verification technology to every trader taking part in the markets.
Chief executive Tarek Mansour said in July that drug development is one of the most important and most information-constrained industries in the world, and that the data showing which drugs advance and which do not is largely kept from the people who need it most. He said surfacing that information is what Kalshi exists to do, and that the company is committed to doing it correctly.
Kalshi also observed that investors routinely buy shares in biotechnology and pharmaceutical companies that are waiting on regulatory decisions.
Company spokesperson Jack Such said the hypothetical concerns raised by the senators apply just as well to the equities market, which he said appears to have been left out of their letter. He argued that the only difference is that the size of the market — and the incentive to engage in bad activity — is significantly greater in equities than it is on Kalshi.