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Research Article

Dosage form selection using price function of prediction market

[version 1; peer review: 1 approved with reservations]
PUBLISHED 12 Feb 2025
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Abstract

Backgrounds

A prediction market (PM) is a process for predicting future events by gathering knowledge from participants. Researchers applied PM concept to predict the new dosage form, the industry may be able to produce incrementally modified drugs (IMDs) in the future.

Methods

The PM process started with building a PM based on the market scoring rule, which is a mechanism that automatically adjusts prices through the calculation of the price function by the market maker. Analysis of data according to the PM process. Since March 19, 2022, participants in Thailand’s pharmaceutical industry have been using online Zoom sessions to engage in purposive selection for trading contracts, following the submission of consent forms. Qualitative data analysis will be conducted using thematic analysis.

Results

A total of 28 participants. In the first round, participants were interested in investing in the sustained release, orodispersible tablet, and soft gelatin capsule. The second round was after receiving the dosage form information. Participants adjusted their investments to sustained release, orodispersible tablets, and nasal spray, by choosing to invest in the nasal spray dosage form because the company has the potential to produce. In the final round to confirm investment results the top three participants were sustained release, orodispersible tablet, and nasal spray dosage form.

Conclusion

The dosage forms industry is expected to produce IMDs in the future, including sustained release, orodispersible tablets, and nasal spray.

Keywords

prediction market, dosage forms, incrementally modified drug

Background About Prediction Market

Prediction Markets (PM), also known as Information Markets (IM) or Event Futures, are mechanisms used to predict future outcomes by harnessing the collective knowledge of participants. This is achieved through trading contracts related to specific events that require predictions. Participants in these markets receive payoffs based on the contracts they hold and the accuracy of the future outcomes they predict.5 The University of Iowa pioneered the use of Prediction Markets (PM) with the establishment of the Iowa Electronic Market (IEM) in 1988. This PM was designed to forecast the outcome of the US presidential election and involved the creation of trading contracts. If a participant’s election prediction proves accurate, they receive the agreed-upon payout through this electronic prediction market.6,5

In fields such as pharmaceuticals and technology, PM can be used to forecast the success of research and development projects. This helps allocate resources more effectively. Graefe’s study applied the PM to predict whether a new drug to be developed will pass future clinical studies. The study found that the effectiveness of the PM depends on 1) the participant is relevant and knowledgeable in the relevant subject; 2) the participant is willing to provide useful information to the research study; and 3) the investigator. Able to manage the information received properly and appropriately.7

PM is used in various ways; therefore, it is important to understand the terminology associated with PM, as in Table 1.

Table 1. Terminology of Prediction Market.

Term of literature review Description Term of used
Prediction market or Information markets or Event futures or Betting market or decision marketThe marketing process for predicting future results.Prediction Market
Participants or Expert or Prediction participant or Market participantParticipants predict future outcomes of the market for PM.Participants
Trading contract or buy and sell contracts or Exchange contractsThe process of buying and selling through contracts.Trading contract
Payoff or on a bet or Reward orProfitThe return on the outcome of future events.Payoff
Play money or Virtual moneyAs though it were actual currency.Play money

A Comparison of Prediction Markets Versus Surveys, Opinion Polls, Face-to-Face Meetings, and the Delphi Method

Previous studies have demonstrated the predictive accuracy of PM. When compared to the Delphi Method, it was observed that the Delphi Method was user-friendly and cost-effective. PM’s versatility makes it applicable across various industries and forecasting scenarios due to its user-friendly nature. Additionally, PM can operate continuously and incentivize participants to provide accurate predictions based on their genuine beliefs. Nonetheless, participants are required to possess knowledge of marketing and contract trading for effective engagement.4

When it comes to forecasting, the PM method is as precise as opinion polls. In predicting the percentage of support for US presidential candidates, it exhibited a mere 1.5% margin of error, whereas opinion polls had an error rate as high as 2.1%.6

When comparing face-to-face meetings, nominal groups, the Delphi methodology, and Prediction Markets (PM) across ten different questions, it was discovered that the Delphi Method outperformed direct face-to-face meetings, while the PM and small group meetings yielded similar levels of accuracy. However, participants expressed lower satisfaction with the PM due to its perceived limitations, including difficulty in access and lack of interactivity, attributed to its computerized nature.8

Kloker et al proposed the integration of a prediction market in conjunction with Delphi studies and the selection of participants based on their trading behavior within the market for the Delphi study. This study introduces attributes of trading behavior that are theoretically derived from existing literature and may be associated with informed traders. These attributes are subjected to testing and evaluation using historical prediction market data. In terms of originality and value, the identified attributes can be harnessed to make the selection of experts for Delphi studies more objective, potentially leading to increased consideration of information in the process.9

This study employed the PM process for forecasting, as PM has proven accuracy in predicting future events related to the development of dosage forms for IMDs. This study created a Google Sheets-based application to facilitate participation in PM and simplify the prediction process. Furthermore, while traditional marketing forecasting primarily focuses on future predictions, our research sought to provide a rationale behind these predictions. Hence, we integrated the PM process, allowing participants to provide justifications for their choice of trading contracts concerning specific dosage forms in each round of the contract initiated.

Prediction Market Requirements

In Thailand, Sripawatakul proposed a four-step decision flow diagram for creating a PM, outlined as follows1012:

  • 1. Select a matching mechanism for the trading contract from the four available options: Continuous Double Auction (CDA), Pari-Mutuel, Dynamic Pari-Mutuel, and Market Scoring Rule (MSR).

  • 2. Selection of currency type: In Prediction Markets (PM), the choice between using real money or play money as currency has been shown to produce comparable results and levels of accuracy.

  • 3. Market participant volume: The efficiency of the forecasting market engine improves significantly with a larger number of participants. In extensive markets, heightened motivation and a richer information base for trading contracts are observed. However, even in smaller markets with limited interest, accurate predictions can still be achieved with a minimum of 16 participants.

  • 4. Incentives are essential for fostering consistent contract trading among market participants. In this study, the primary motivation during the market opening period was intangible, rooted in pride and the anticipation of progress in the domestic pharmaceutical industry. This served as a powerful incentive for participants. Additionally, the contract market continuously reviewed and refined predictions to ensure result accuracy.

The objective of this study was to identify new dosage form developments for IMDs for the domestic pharmaceutical industry in Thailand using Prediction Markets (PM). The literature review on new dosage form development covered eight types: sustained release, orodispersible tablets, soft gel capsules, delayed release, transdermal patches, nasal sprays, thin films, and powder sachets.

  • 1. The study chose the Winner-Take-All type of prediction market (PM) because it is easy for participants to understand and aligns with the preferences of many market makers. In a Winner-Take-All contract, each contract is priced at p baht, and if a participant accurately predicts the event’s outcome, they receive a payoff of 1 baht. The contract price represents the associated probability.

  • 2. We utilized the Market Scoring Rule (MSR) as the contract matching mechanism. MSR is designed to address market liquidity challenges, offering the notable advantage of unlimited liquidity provided through market maker-facilitated trading. The market maker determines the total contract value, which acts as the cost for the buyer and the revenue for the seller, using a price function. The price function is calculated as follows13,14:

pricen=eqnbeq1b,+eqnb
by price n is price of contract n

B” serves as a constant determining the upper limit on the payout amount market makers can offer.

q1 ” represents the quantity of contracts purchased for outcome 1.

qn ” represents the quantity of contracts purchased for outcome n.

  • 3. The prediction market (PM) application was conducted using Google Sheets and featured eight dosage form options: sustained release, delayed release, orodispersible tablet, nasal spray, chewable tablet, thin film, transdermal patch, and powder in a sachet. These forms were identified through literature reviews and input from pharmaceutical industry experts and prescribers. Participants could specify the number of contracts or shares they wished to purchase for a particular dosage form by selecting the corresponding cell. The initial share or contract price was determined using a starting pricing formula, which was then adjusted based on market demand in subsequent rounds. The study consisted of four rounds, and investors were encouraged to keep investing until information saturation was reached.

  • 4. A pilot test of the PM application was conducted, with the research team carrying out two investment rounds to evaluate the system. Following the system test review, adjustments were made to facilitate share trading in each round. The researcher decided to provide supporting IMD information before the second round. Initially, investor opinions were gauged during the first round, and improvements were made based on this feedback before offering the support information.

Methods

The research was approved by the Human Research Ethics Committee of Khon Kaen University (HE642276) on January 20, 2022. Each participant was required to complete a consent form by mail after receiving a thorough explanation of the study’s objectives and methods for trading contracts prior to participating in the prediction market. Participants were given a confidential investment code that was not shared among them.

We specifically invited participants who are executives or decision-makers with the authority to make investment decisions in the domestic pharmaceutical manufacturing industry and are members of the Thai Pharmaceutical Manufacturers Association (TPMA). Those who provided consent participated in an online Zoom session lasting approximately 60 minutes. During this session, audio was recorded for subsequent data analysis. It was emphasized that these recordings would be securely deleted upon the study’s completion.

The prediction market experiment was performed using google sheets. Rules and method to trade the contracts were instructed as following:

  • 1. The primary question in the prediction market experiment was, “Which type of dosage form will the domestic pharmaceutical industry successfully invest in for research and development?” Participants expressed their opinions by buying stocks in various dosage form candidates: sustained release, delayed release, orodispersible tablet, nasal spray, chewable tablet, thin film, transdermal patch, and powder in a sachet. The number of stocks purchased indicated the perceived likelihood that these dosage forms should be prioritized for research and development.

  • 2. Each participant was allocated an investment budget of 100 Thai Baht. The initial stock for each dosage form was set at 30,000 units, priced at 0.13 Baht per unit

  • 3. To begin the PM experiment, the research team provided supporting information for market participants to consider when making investment decisions. This information included:

      3.1 An overview of drug spending (producer price) in 2019 by ATC level 1, categorized into domestic production and imports.

      3.2 The growth rate of expenditure for each candidate dosage form during 2011 to 2019.

      3.3 Ten years of trends in the import value of each candidate drug dosage form within the new generic drug category.

      3.4 Trends in research and development on drug dosage form advancements, analyzed from international drug registration data sources.

      3.5 Qualitative data on health needs for advanced dosage forms, gathered from in-depth interviews with medical specialists, including psychiatrists, pediatricians, gastroenterologist, endocrinologists, and pharmacists.

      3.6 The cost and duration of research and development for various drug dosage forms.

  • 4. In the first round, participants could only purchase stocks. From the 2nd to the 4th rounds, they could trade the stocks, either buying more or selling the stocks in their portfolio. At the end of each round, the stock unit price of each dosage form was recalculated based on the number of stocks sold. The more stock units sold, the higher the unit price for the next round.

  • 5. The PM experiment was planned to last for four rounds or until data saturation was achieved. The dosage forms with the top three highest stock values were identified as the most promising and recommended for investment.

  • 6. All participants in PM experiment will be rewarded with the comprehensive research report of’Prediction Market for Incrementally Medicinal Devices (IMDs) Dosage Form Development’.

Data analysis

At the end of each trading round, the stock unit prices of each dosage form were recalculated based on the number of stock units sold. The price function was:

pricen=eqnbeq1b,+eqnb
by price n is price of contract n

B” serves as a constant determining the upper limit on the payout amount market makers can offer.

q1 ” represents the quantity of contracts purchased for outcome 1.

qn ” represents the quantity of contracts purchased for outcome n.

To assess the accuracy and reliability of predictions made by participants the winning ratio was calculated using the below formula.15 A high winning ratio builds confidence in the market’s predictions, while a low winning ratio may suggest that the market’s forecasts are not very accurate. Descriptive statistics were presented as percentages.

Winning ratio=WinsTotal number of prediction

Wins is treading contract number of each dosage forms.

Total number of predictions is Total treading contract.

Qualitative data: Thematic analysis for qualitative data is conducted manually, involving the provision of codes.

Results of PM for Dosage Form Development of IMDs

A total of 28 participants accepted the invitation to join the PM experiment. Regarding their job positions, the participants can be classified into five categories: Executive Director, R&D, Marketing, Production, and Registration. The majority of participants were executive directors as shown in Figure 1.

d9445bc0-4e02-4fb4-b566-076a1f183658_figure1.gif

Figure 1. The characteristics of all participating participant.

Total dosage forms selected by participants across 3 rounds are detailed as follows:

Round 1

The primary focus of investor interest lies in the top three dosage forms: sustained release, orodispersible tablet, and soft gelatin capsule. Investors predominantly based their choice of dosage form on the capabilities of the domestic pharmaceutical industry. The rationale behind these decisions is substantiated by the following supporting information:

“Taking into account the company’s facilities, their readiness, and the ease of conducting bio-equivalence studies.”

"Given the factory’s capacity for research and production.”

"Production facilities are readily available.”

Most of the reasoning is centered around the readiness of the industry and its potential for developing IMDs. Table 2. shows the reasoning behind the selection of each dosage form in round 1.

Table 2. Investor’s rationale for choosing the dosage form, round 1.

Dosage formRational
Sustained release“Sustained releases are needed to treat many diseases.”
Oro-dispersible tablet“Orodispersible are needed to treat many diseases.”
Soft gelatin capsule“Soft gel is easier to make and easier to register than any other dosage forms.”
Nasal spray“There is an increased need for nasal spray, and the price of imported drugs is very high.”
Powder of sachet“Investment in powder medicine, small investment, easy production marketed quite easily. If you choose the drug that people want”.

Round 2

Following the researcher’s provision of supplementary information to bolster additional investments, a shift in participant interest patterns became evident. Specifically, the focus shifted towards sustained release, orodispersible tablets, and nasal sprays.

Upon examining the rationale behind investors’ choices of various drug forms, it became apparent that when presented with investment-supporting information, the majority of investors made their decisions based on data that underscored the requirements of end-users, particularly physicians. The example supporting messages were as follows:

“Estimated from data on international drug dosage form trends and the demands of local healthcare professionals.”

“Information received from both written sources and medical personnel influences decision-making.”

“Considering the growing demand among physicians for sustained-release dosage forms.”

Table 3 shows the reasoning behind the selection of each dosage form in round 2.

Table 3. Investor’s rationale for choosing the dosage form, round 2.

Dosage formRational
Sustained release“Further investment is deemed essential for the sustained-release (SR) dosage form, aligning with market trends and input from clinicians. This is intended to improve patient compliance and meet patient’s needs.”
Delayed release“Because there is still demand and value in the market. And it’s a form that can already be done.”
Nasal spray“It possesses the capability for production, and there are only a few domestic producers of nasal spray.”
Transdermal patch“Transdermal is interesting.”

Round 3

In the third investment round, aimed at confirming the results of investors’ decisions, it was determined that the domestic pharmaceutical industry’s drug dosage forms would be capable of producing, as indicated in Table 4. The winning ratios for these dosage forms were as follows: sustained release (31.85 %), orodispersible tablet (23.34 %), and nasal spray (14.92 %). Table 5 shows the reasoning behind the selection of each dosage form in round 3.

Table 4. The participants can select the development of dosage forms in the future.

Trading contract Sustained Release ODT Soft Gelatin Capsule Delayed Release Transdermal Patch Nasal Spray Thin Film Powder of Sachet
Round 1
Trading contract4,5903,9802,6851,6351,2702,8007051,315
Winning ratio24.18%[1]20.97%[2]14.15%8.61%6.69%14.75%[3]3.71%6.93%
Round 2
Trading contract6,452.14,7841,8551,7891,448.242,6695551,455
Winning ratio30.71%[1]22.77%[2]8.83%8.52%6.89%12.71%[3]2.64%6.93%
Round 3
Trading contract7,031.15,1531,7171,8601,280.243,2944251,315
Winning ratio31.85%[1]23.34%[2]7.78%8.43%5.80%14.92%[3]1.93%5.96%

Table 5. The participants can select the development of dosage forms in the future.

Dosage formRational
Sustained release“Investment in sustained release (SR) dosage forms seems to have a more promising market outlook compared to other dosage forms of medicinal.”
Nasal spray“Based on the investment trend, nasal spray ranks second after sustained release (SR), indicating that it warrants increased investment.”

Discussion and recommendations

The drug development directions were obtained from the drug registration and approval information available on Drugs@FDA: FDA-Approved Drugs (www.accessdata.fda.gov).16 We identified 10 groups of high-value drugs commonly used in Thailand. The most developed dosage forms across all treatment groups were the sustained release, orodispersible tablet, and delayed-release tablet respectively. In this analysis of the prediction market, the identical outcomes from the searching were sustained-release dosage forms, followed by orodispersible tablets.

The study’s findings revealed a total of 8 dosage forms, which include sustained release, delayed release, orodispersible tablet, nasal spray, chewable tablet, thin film, transdermal patch, and powder of sachet. The domestic pharmaceutical industry or participants for PM, predicting “What is your prediction for the type of dosage form that the domestic pharmaceutical industry will successfully invest in and develop?” As a result, 3 dosage forms are anticipated for future development: sustained release, orodispersible tablet, and nasal spray.

An examination of the accuracy of PM results for predictive purposes in the field of dosage form development of IMDs was conducted as follows: Comparative analysis of PM results and evaluation assessment reports from 505(b)(2)17 USFDA particularly in the issue of dosage form development for IMDs. It was found that for most of the drugs after USFDA approval and entering the market, the dosage form of the IMDs was sustained release.16 Similar to the findings of in-depth interviews with prescribers in the previous study, it was found that they prefer the development of SR tablets to improve medication compliance and reduce the frequency of medication intake.18

In 2020s, the growth rate for locally produced new generic drugs was relatively modest, with a Compound Annual Growth Rate (CAGR) of 7.12%. In contrast, the situation was distinct for imported new generic drugs, displaying a higher growth rate at a CAGR of 16.21%.19 Nonetheless, the latest generic medications still encompass over 54% of the market share. Therefore, this study is advisable for Thailand to prioritize the advancement of this sector to encourage the development of SR tablets for IMDs. In this research, the majority of PM participants possess the capability to develop new generic drugs as well as SR and other dosage forms.

In the realm of PM applications, numerous options have emerged since the inception of the Iowa Electronic Market20 However, participant satisfaction with these platforms has often been marred by difficulties in access and a perceived lack of interactivity due to their computerized nature.8

Consequently, the research team developed a user-friendly Excel-based PM application, drawing inspiration from the concept of the Iowa Electronic Market. When utilizing PM, it is advisable to consider the following factors:

  • 1. The future event to be predicted should possess a clearly definable outcome to facilitate accuracy measurement.

  • 2. Participants should possess relevant prediction-related knowledge and sufficient data to make informed predictions.

  • 3. For extensive PM deployment, the development of a dedicated website application may be necessary to enhance prediction accessibility. Participants must also have the requisite knowledge and access to the website.

The incentive behind this Prediction Market (PM) was the prospect of participants receiving the study results if they secured ranks within the top three positions. Previous research has identified two primary categories of motivations: 1) Ranking-based incentives and 2) Performance-driven incentives. Notably, a study conducted by Kridchapat in 2012 demonstrated that ranking-based incentives consistently outperformed performance-driven incentives in terms of prediction accuracy.14

Therefore, this paper presents two key contributions. Firstly, it stands as the inaugural investigation into the PM study of dosage form advancement for IMDs in Thailand, culminating in the forecast of sustained-release dosage forms. Should the domestic pharmaceutical industry embrace this prognosis and embark on the development of sustained-release dosage forms utilizing new or advanced technologies, it could significantly augment its competitive edge on the global stage. Secondly, the paper proposes a roster of developed dosage forms across ten treatment categories: lipid-modifying agents, medications for peptic ulcers and gastroesophageal reflux disease (GERD), primarily vascular-effect-focused selective calcium channel blockers, blood glucose-lowering drugs, NSAIDs, beta-lactam antibacterial agents, antiepileptics, systemically used antihistamines, antipsychotics, and beta-blocking agents.

Conclusions

The PM through the order-matching mechanism uses the price function method to predict the patterns that the domestic pharmaceutical industry will be able to produce IMDs which has executives or decision-makers to invest in the domestic pharmaceutical industry. The first three predicted outcomes were sustained release, orodispersible tablet, and nasal spray.

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Hongthong C, Sakulbumrungsil R, Kessomboon N et al. Dosage form selection using price function of prediction market [version 1; peer review: 1 approved with reservations]. F1000Research 2025, 14:197 (https://doi.org/10.12688/f1000research.161732.1)
NOTE: If applicable, it is important to ensure the information in square brackets after the title is included in all citations of this article.
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Current Reviewer Status: ?
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ApprovedThe paper is scientifically sound in its current form and only minor, if any, improvements are suggested
Approved with reservations A number of small changes, sometimes more significant revisions are required to address specific details and improve the papers academic merit.
Not approvedFundamental flaws in the paper seriously undermine the findings and conclusions
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Reviewer Report 24 May 2025
JIE-LONG HE, Department of Post-Baccalaureate Veterinary Medicine, Asia University, Taichung, Taichung city, Taiwan 
Approved with Reservations
VIEWS 8
Review Summary
Charkkrit Hongthong et al. presents an innovative and practical application of prediction markets (PM) to identify priority dosage forms for incrementally modified drugs (IMDs) in Thailand’s pharmaceutical sector. The integration of participatory forecasting with the market ... Continue reading
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HE JL. Reviewer Report For: Dosage form selection using price function of prediction market [version 1; peer review: 1 approved with reservations]. F1000Research 2025, 14:197 (https://doi.org/10.5256/f1000research.177805.r377300)
NOTE: it is important to ensure the information in square brackets after the title is included in all citations of this article.

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Alongside their report, reviewers assign a status to the article:
Approved - the paper is scientifically sound in its current form and only minor, if any, improvements are suggested
Approved with reservations - A number of small changes, sometimes more significant revisions are required to address specific details and improve the papers academic merit.
Not approved - fundamental flaws in the paper seriously undermine the findings and conclusions
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