U.S. pharmaceutical companies are increasingly going abroad to conduct clinical trials required by the FDA.Recently, the Department of Health and Human Services released a report suggesting that the FDA lacks the resources to adequately monitor these foreign trials. Four of every five new drugs sold in the U.S. are tested in foreign trials, and the FDA inspects less than one in 10 of these. This is half the rate of inspection for domestic trials.

The potential for fraud seems high. In fact, some medical ethicists used the report to insinuate that pharmaceutical companies were deliberately conducting foreign trials in order to avoid U.S. ethical constraints and to experiment on unsuspecting foreign patients.

These concerns are exaggerated and ignore the complexities of modern clinical research. If the FDA and Congress push companies to conduct more domestic clinical trials, foreign patients will lose the often valuable health benefits gained from participation in clinical trials, and domestic consumers will suffer from slower access to new, life-saving therapies.

Critics forget that about half of all foreign trials are conducted in Europe. There, European regulators impose ethical rules on clinical research similar to the FDA's.

The real reason drug companies are conducting more trials in Europe (and Central and South America) is because it is increasingly difficult to recruit patients in the U.S.

Drug companies are victims of their own success. American patients weigh the costs and benefits of trial participation very carefully. The vast majority of American patients already have access to a wide range of safe and effective non-experimental treatments, and generous public or private insurance to pay for them. So why would an American patient enroll in a trial for a new therapy that may or not work when they have access to the newest therapy that does?

As a consequence, it takes companies longer to recruit patients here, and evidence suggests that this is the major reason why recruitment is cheaper in Europe (some studies report that clinical trial recruitment costs in France are 50 percent less than in the U.S.)

There are some exceptions. U.S. patients with advanced cancer willingly embrace experimental therapy after exhausting proven treatments. But, in general, the U.S. market for clinical trials is "saturated" because American patients take it for granted that they have rapid access to the most advanced therapies.

Foreign clinical trials also benefit patients in poorer countries. While the health care systems in Central and South America are less developed than in the U.S. (and thus a more challenging environment in which to conduct clinical trials) patients in countries like Peru and Columbia do not have access to many treatments that are available in the U.S. Few in these countries have insurance to pay for these treatments. With such limited alternatives, they are willing to give informed consent to enroll in trials testing novel therapies, trials that often also include more care and monitoring of their conditions than they would receive outside the trial.

Shifting clinical trials outside the U.S. is both economically efficient and ethically sound. If ethicists who argue that drug companies who want to get their drugs approved by the FDA must conduct trials in the U.S. win the day, it will add years to the length of trials and delay the introduction of new drugs.

In a recent study for the Manhattan Institute[1] we quantified for the first time the costs to patients (rather than companies) of drug development delays and found that even a single year's delay costs patients billions of dollars in terms of lost lives. This sum far outweighs the cost to companies of conducting clinical trials.

Limiting overseas trials would contribute to these delays, and the losses to U.S. patients would be staggering. Patients in foreign countries who would otherwise benefit from participation in clinical trials would suffer as well.

However, we should take steps to address legitimate concerns with the rising length and costs of U.S. drug development--like the fact that many new treatments languish for years because there aren't enough patients available to test them. Currently, less than 5 percent of eligible patients participate in U.S. trials.

Researchers have great difficulty finding the few Americans who are willing to enroll in clinical trials. Patients who would be good candidates for a trial often do not know about open trials. As a result, drug companies must pay doctors to recruit patients, but these payments can encourage fraud.

It would be more sensible to use electronic medical records to identify patients with inadequate treatment options. A number of New York state medical centers have begun such a program, called the Partnership to Advance Clinical Electronic Research (PACER).

Trial participation rates are also low because participants aren't well compensated. Increased financial compensation for U.S. patients should be seriously considered. Better compensation, combined with rigorous informed consent, would effectively allow future patients (who pay for and benefit from research on new therapies) to pay current patients (who test new therapies) for this valuable public service.

Several of the HHS report's recommendations should be embraced - particularly those that will improve transparency for foreign trials. For instance, the FDA already requires that foreign trials operate under the Declaration of Helsinki, which mandates that patients be honestly informed about the risks and benefits of an experimental therapy and that enrollment be truly voluntary. But the agency has limited ability to screen foreign trials.

As HHS suggests, the FDA should negotiate cooperative investigation agreements with foreign regulatory agencies and create a better electronic registry for foreign trials.

We should keep some perspective on the trend toward foreign clinical trials. While the U.S. represents just 5 percent of the world's population, it provides over 20 percent of patients for clinical research. The reason for the disparity is that the U.S. is responsible for almost one-half of global research and development funding for new medicines.

Since the benefits of drug development are shared by the whole world, a proper balance of burdens would inevitably entail more, not fewer, clinical trials conducted outside our borders.

Anup Malani is a professor at the University of Chicago Law School and a university fellow at Resources for the Future. Tomas J. Philipson is the Daniel Levin professor of public policy at the University of Chicago and chairman of the Manhattan Institute's Project FDA. In 2003-04, he served as senior economic adviser to the commissioner of the FDA.