Emerging economy concepts and characteristics

Drug Trials

One of the emerging issues in the pharmaceutical business is the practice of offshoring drug trials. Firms are doing this with increasing frequency, in part because there are lower costs associated with offshore drug trials, and in part because the FDA allows it. There are, however, several ethical issues that arise from the offshoring of clinical drug trials. Singh (2012) notes that compensation rates for participants are lower in emerging markets like India. In that country, 483 patients died during clinical trials, but the payouts to next-of-kin were very low by Western standards. These situations arise because there is a lack of norms and standards in many emerging markets, and where such standards exist there is a lack of enforcement.

It has been argued that one of the main objectives for running clinical trials in emerging markets should be to "bring research to populations who have been previously underrepresented in clinical trials" (Rettue, 2012), as opposed to simply searching for cost savings. Such an ethical standard, however, does not appear to be in force. This begs the question -- what standards should apply?

From an ethical standpoint, there are two approaches. The first is to adopt the standards of the foreign country. Many emerging markets suffer from poor governance, however, a situation that leads to a lack of standards. Compounding the issue is that many such markets are new to drug testing, and further compounding the issue is that aside from India, many emerging markets are not democracies. Thus, the people have no say in the laws they want to see in their country, which opens the regulatory system to corruption. The lack of laws governing clinical trials could stem from pressure from unethical research firms, for example.

Therefore, it is better from an ethical perspective to uphold the laws of the home country, which in pharmaceuticals is typically the United States or Europe. By upholding Western standards of ethics for drug trials, a company will not only meet its ethical obligations but will also ensure a higher standard of research. Clinical trials in emerging markets will still be cheaper than in Western markets, because the research staff will earn less, and because payouts to test subjects can be adjusted for living costs without violating ethical norms. Also, because standards provide structure, the quality of the research will be improved by applying Western standards in lieu of local standards.

Thus, the strongest ethical case lies for managing drug trials in emerging markets much as they would be managed in the West. The trials need to meet the specifications of the FDA anyway, and even with Western standards the cost of foreign drug trials will be lower. Additionally, when the drug company is free from the perception of ethical violation, not only will the results seem stronger, but the company will not face criticism in the home market from activist groups. The more this issue comes to light, the more likely it is that the issue of unethical practices in overseas drug trials will become an issue among domestic consumers.