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OM in the News: Yet Another Industry Being Outsourced to India

February 5, 2015

drug safety2Hundreds of workers sit at office computer terminals in Bangalore, poring over reams of medical records from the U.S. Their job: Monitoring drug safety. It is one of outsourcing’s newest frontiers, writes The Wall Street Journal (Feb.3, 2015), and the now $2 billion business is booming as regulators require closer tracking of rare side effects and interactions between medicines. Outsourcing companies such as Accenture, which runs its large drug-monitoring operation in Bangalore, are benefiting from a desire by big pharmaceutical companies to farm out safety checks so they can cut costs and focus on developing and marketing new treatments.

Critics of the practice say drug monitoring is difficult, requiring deep experience and a knack for detective work in addition to knowledge of biochemistry and pharmacology, and that the shift toward outsourcing carries risks that deadly side effects will go unnoticed. (Adverse reactions to medication are the 4th leading cause of death in the U.S., killing more than 100,000 people a year. Even drugs that have been on the market for decades can have unknown and deadly side effects). Drug-industry experts warn that if the so-called pharmacovigilance activities are treated like other forms of back-office work and not done by properly trained employees, the work won’t be effective.

Accenture’s drug-safety work has tripled in the past 7 years. It sent around 600,000 reports of drug side effects to regulators last year. Accenture said it performs all its drug-safety work in India, in part because labor costs are much lower than in developed countries. While the boom in the drug-safety business is a sign that the outsourcing relationship is working for companies, it is making safety regulators increasingly leery. Scientists employed by outsourcers may have the same degree qualifications and know as much biology as an in-house team, but they don’t know as much about that company’s products. That means that they may be less likely to find the source of a potential problem.

Classroom discussion questions:

1. Why are drug companies now outsourcing drug safety monitoring to India?
2. What are the minuses of such actions?

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