Senators press HHS on prediction markets for drug trials and FDA approvals

Two senators question trial and approval contracts

Senators Angela Alsobrooks of Maryland and Ron Wyden of Oregon have asked the Department of Health and Human Services how it plans to limit risks from prediction markets on clinical drug trials and FDA approvals. The two Democrats sent the request to HHS Secretary Robert F. Kennedy Jr. in a letter dated Wednesday, 11 November, a copy of which CNBC obtained first.

The senators asked what steps the department has taken to reduce any harm the markets could cause. They also asked for a set of records: internal communications about staff taking part in prediction markets on matters HHS governs, correspondence with the platforms, exchanges with the Commodity Futures Trading Commission, and any internal analysis of the markets' effects.

The argument in the letter

In the letter, the senators set out their objection. "Allowing individuals to bet on the success of these trials and drugs undermines the scientific process," they wrote, adding that it creates incentives for researchers and could lead to dangerous medical outcomes.

They repeated a concern raised by some healthcare professionals: that the markets could influence how patients weigh joining a trial. They also pointed to possible insider trading by researchers and regulators who hold nonpublic information. HHS, the FDA and the National Institutes of Health, they wrote, must protect the integrity of drug development and public trust in public health.

What the platforms offer

Kalshi and Polymarket both list such contracts. Polymarket's versions sit on its international exchange, which is not regulated in the United States.

Kalshi launched its markets in July and said at the time that it had built in limits, including restricting contracts to late-stage trials. The company said it would list a contract only after a trial had finished enrolling participants and would verify the employment of everyone trading in these markets.

"Drug development is one of the most important and most information-constrained industries on earth," Kalshi CEO Tarek Mansour said in July. He said the data that decides which drugs advance is largely unavailable to the people who need it most.

Kalshi's reply and the open questions

Kalshi spokesperson Jack Such told CNBC that the senators' concerns would apply equally to equity markets, which the letter does not address. He said the size of the equities market, and the incentive for bad activity there, is significantly higher than on Kalshi.

Polymarket and HHS did not immediately respond to CNBC's requests for comment. CNBC disclosed a commercial relationship with Kalshi that includes customer acquisition and a minority investment. Whether HHS will answer the letter, and what the requested records show, is not yet known.