Ethics Of Global Outsourcing In Clinical Trials Economics Essay

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5/12/16 Economics Reference this

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The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals licensed for use as medications1. Since the 19th century when most of todays major pharmaceutical companies were founded, numerous key drugs have been discovered to combat diseases, including the development of “miracle” drugs from insulin and penicillin to the treatments of cancer, AIDS, and heart disease. Despite the pharmaceutical industry’s notable contributions to human progress, recently there is a growing tension between the industry and the public. Public concerns about issues including drug pricing, affordable health system, and new drug efficiency have raised questions whether the multibillion-dollar industry is fulfilling its social responsibilities and how the industry can and should be expected to act2. This paper will focus on the increasing trend in global clinical trial outsourcing, discuss and propose solutions to the ethical dilemmas that drug industry is facing in the globalization of clinical research.

Current Trend in Clinical Trial Outsourcing in Pharmaceutical Industry

In the past decades, the concept of globalization has been widely employed in many business models, and outsourcing has affected and transformed many industries, including drug makers. The pharmaceutical industry was late to adopt outsourcing as a regular business practice, but as patent and intellectual property protection became more stringent and universal, pharmaceutical companies became more comfortable with outsourcing to offshore locations, especially in the realm of clinical trials.

Two decades ago, nearly all of clinical trials were conducted in the US, administrated by major US-based pharmaceutical companies. In 1990, according to the inspector general of the Department of Health and Human Services, a mere 271 trials of drugs intended for American use were conducted overseas. By 2008 the annual number had risen to 6,485-an increase of almost 2,400 percent, compared to less than twenty years ago3 4.

Another database compiled by the National Institutes of Health (NIH) identified 58,788 clinical trials in 173 countries outside the United States between 2000 and 2008. Nearly 80 percent of the new drug applications submitted to the US Food and Drug Administration (FDA) in 2008 contained data from offshore clinical trials5. While more drugs than ever are-2,900 different drugs for 4,600 different conditions-undergoing clinical testing, companies are outsourcing more and more of trials to foreign sites.

Benefits of Global Outsourcing in Clinical Trials

The global pharmaceutical industry today is facing numerous challenges, including anticipated loss from patent cliff, skyrocketing development expenses and shrinking profit margin, increasing heavy competition, and growing regulatory pressure. To address these issues and minimize their negative impacts, the pharmaceutical community has to make changes within the industry. Outsourcing becomes one of the key strategies6.

Pharmaceutical companies outsource clinical trials in new drug development process for cost and time effectiveness. In the past twenty years, the cost of bringing a new drug to market has risen from 230 million US dollars to 1.7 billion US dollars. The time it takes to develop one drug has doubled from seven years to almost fourteen years7. Clinical trials account for 50 to 60 percent of the total development cost and take up to 30 to 50 percent of the total time spent8,9. Thus, the pharmaceutical industry has embraced global outsourcing in clinical trials as a key solution to the ever increasing price and time consumption in new drug development.

First, there is a cost advantage in executing similar clinical trials in a developing nation rather than in a developed nation. The price per case report in India in a first rate medical center adds up to 1,500 to 2,000 US dollars, only one tenth of the cost if the same case report is run in a second-tier medical center in the US10. This cost benefit has stimulated the massive increase of clinical trials in developing nations and driven the growing market size of the contract research organizations (CROs). By outsourcing clinical trials to developing countries such as India, drug makers can effectively reduce cost by over 50%.

Second, outsourcing in clinical trials offers a faster turnaround time on the completion of testing, providing a clear competitive advantage for pharmaceutical companies whose return on investments has a short period. Patents in the US have a twenty year lifetime, and drug makers have to narrow the nearly-fourteen-year development window to maximize their profits―the faster the company can get its product to the market, the longer it will be able to profit from the new drug and its patent protection. Developing nations such as Indian, China, and Eastern European countries boast a large population of potential human subjects for clinical trials. With a more accessible and willing patient pool, companies can speed up patient recruitment by nearly 30 percent, leading to a much faster turnaround time. It also helps combat the issue of clinical trials missing their deadline because of failure to recruit patient fast enough, which occurs 70% of the time in developed nations7.

Ethical Issues in Clinical Trial Outsourcing

The outsourcing strategy provides practical solutions to the costly and time-consuming process that clinical research proves to be in developed nations. However, this globalization of clinical studies has raised many ethical concerns.

Wide disparities in education, economic and social standing, and health care systems may jeopardize the rights of research participants4. Many of these clinical trials are outsourced and performed in developing countries with large concentrations of poor and often illiterate people, who are educationally and socially underprivileged and therefore vulnerable to be exploited. These participants may lack basic understanding of the nature of clinical trials and blindly sign uninformed consent forms with, in some case, a thumbprint or a “X” mark11. As the local population survives on only a few dollars a day, the financial compensations provided are comparably a large amount and sometimes the only or most substantial source of incomes for participants in clinical studies. Thus, some participants ignore the possible negative effects and take part in as many clinical studies as they can. In other words, language barriers, lower education levels in developing nations, and the lure of relatively high monetary rewards can create an unsafe environment for research participants.

Less stringent regulations in developing nations also increase probability of unethical behavior in clinical trial outsourcing. Developed nations such as the US have developed more and more complex regulatory infrastructures. It has become common practice and also mandated by law to review new drug clinical trials by internal ethics committees. These facts lead clinical trials conducted in developed countries to be an extremely expensive and time consuming process. In contrast, regulations in most of developing countries are virtually nonexistent; regulatory barriers are therefore much easier to overcome so that pharmaceutical companies or CROs can complete clinical trials in a much faster pace with minimal restriction. Only one out of ten clinical trial protocols in China in 2004 got an ethics review; four in five of these protocols failed to discuss informed consent adequately with participants4. This lack of statutory regulation of clinical studies allows for unethical behavior to occur unnoticed and unpunished when pharmaceutical industries outsource their clinical trials to these countries.

Application of Ethical Theory to Analysis of Clinical Outsourcing

Teleological ethics, also known as Consequentialism, is concerned with the purpose of things. Thus, the right act is that which achieves the desired outcome. Utilitarianism, the best-known teleological ethics, states that maximize human happiness is the desired moral outcome12. By outsourcing clinical trials, pharmaceutical companies are able to reduce the cost of new drug development and shorten the prolonged timeline which would be required if these clinical studies are carried out in the US. As a result, drug makers are able to introduce new medicines quickly enough to respond to demands to combat various diseases; the cost saving from outsourcing can potentially lower the price of a new drug, and if not, at least no extra development costs occurred in onshore clinical trials will be passed along to patients. In this perspective, global outsourcing in clinical trials is an ethical behaviour, promoting best consequences and maximizing happiness-more new drug treatments available to human beings, firm value maximized as well as shareholder value, .

However, teleological ethics ignores the means to achieve the desired moral outcome and allows for the possibility of harming a minority of individuals for the overall well-beings. To an extreme extent, all actions are permissible as long as the outcome is good12. This is a significant shortcoming of this theory, which may not properly justify some questionable actions in the matter of clinical trial outsourcing, one of which is involvement of children in the clinical studies. In New Delhi, 49 babies died at the All India Institute of Medical Sciences (AIIMS) between 2006 and 2008 while taking part in 42 clinical trials over a 30-month period. They were given a variety of new drugs to treat various conditions from high blood pressure to chronic focal encephalitis. These blood-pressure drugs had never been given to anyone under 18 before. In all, 4,142 children were enrolled in the studies, two-thirds of them less than one year old13. Although research data might be valuable for the future application of these drugs to children, testing drugs with one year old babies are prohibited and cannot be tolerated, no matter how good the consequence is.

Kantian ethics, based on Deontological theory, maintains that one’s moral duties or obligations determine right actions in every circumstance, regardless of the consequences. In other words, the action itself must be intrinsically moral to be right12. Application of this theory to analysis of clinical trial outsourcing will give a quite different answer from that of Utilitarianism. Most of clinical trials outsourced to developing countries take advantage of high poverty rate, low level of education, loose regulations, and poor health care system in these countries. According to deontological theory, global outsourcing of clinical trials to developing nations is, under current circumstance, an unethical option that however the entire pharmaceutical industry is diving for. There are a long list of morally wrong behaviours in the clinical trial outsourcing, including involvement of children in the trials, uninformed consent discussion, placebo-controlled trials14, and even bribery and corruption in local medical professionals. As a result, drug makers should stop clinical trial outsourcing which benefits from developing nations’ wide disparities, because it is unfair and not “the right thing to do”.

Kantian approach to ethics includes an inflexible moral theory and therefore never allows for context, outcome, consequence, emotion, or any other variable to play a role in decision making. This theory is difficult to solve complex ethical dilemmas the pharmaceutical industry is facing.

There are limitations of either teleological theory or deontological theory in the analysis of global clinical outsourcing. New drug development will definitely benefit the entire human beings; a fast and cost effective clinical trial, as the key step, will shorten the new drug development cycle and keep the affordability of the new treatment. There are a lot of other ethical theories available, some of which may give a better analysis of the ethical dilemma the pharmaceutical industry is facing in the matter of clinical outsourcing.


Outsourcing strategy has become an indispensable part of pharmaceutical business in today’s global market as this strategy help fight the increasing cost to develop new drugs. However, the outsourcing of clinical trials to foreign sites or CROs has created an environment where ethical breeches are more likely to occur. Multiple approaches are needed to address these concerns in order to foster innovation and offer access to novel therapies.

The pharmaceutical industry should take full responsibility for the ethical conduct of offshore clinical trials to meet the challenge. Internal ethics committees in pharmaceutical companies can play a more important role in auditing the offshore clinical research projects according to an established protocol. The company and CROs (if one is hired) should outline key strategies in formal clinical-development plans, which specifies the anticipated study design, the choice and justification of trial sites, and mechanisms for ensuring the quality of the clinical trial. The Internal ethics committees should periodically review the implementation of the plans and make timely feedback to executive management teams so that managers can make proper decisions to ensure the ethical conduct of these trials. In other words, self-regulation within the pharmaceutical industry should be promoted to increase public acceptance of clinical trial outsourcing.

Social value that clinical research will bring to a host nation should be determined during the development of outsourcing plans. It is a fact that wide disparity in education, economic and social standing, and health care systems may jeopardize decision-making skills of potential research participants in developing countries. In that case, the concept of creating shared value should be given a priority-clinical studies can be outsourced to a population where participants will benefit from taking part in clinical trials because they are liable to the targeted disease as well. In this case, the net benefit for participants can be used an evaluation criteria in the decision-making process. Pharmaceutical companies can even consider providing the developed drug at an affordable price in the host nation after the approval of the new drug, to further fulfill their social responsibilities.

To address the concern on regulatory complexity in developed countries, an effort to streamline regulations governing clinical studies could reduce redundancy in the system while ensuring ethical conduct. FDA can employ standard terms for research contracts and streamlined best practices to reduce unnecessary work as well as associated costs for drug makers. This standardization will enable FDA to accelerate its review process and increase its review capacity―FDA inspected 1.9% of US clinical sites and 0.7% of foreign trial sites15. On the other hand, the acceptance of clinical data collected from developing countries should be subject to more stringent regulations, including high transparency requirement in offshore data and scientific proof of relevance to American patients. In addition, improved international collaboration between FDA and foreign regulators can increase the quality of reviews on the offshore clinical trials. Although the regulatory infrastructure in developing nations is still questionable, this collaboration will help improve their current systems to higher standard and enhance FDA’s ability in monitoring and regulating offshore clinical research effectively in a long run.

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