“That’s a great question!” said the presenter, setting off the same sincerity alarm a salesman triggers by constantly repeating your first name. The response came during a webinar on why “Latin America is a rich resource for pharmaceutical companies and contract research organizations (CRO) to develop new drugs at a reduced cost.”

The $175 Drug Information Association (DIA) event touted advantages of outsourcing drug trials to the developing world and of hiring CROs to manage those trials by navigating local regulations, recruiting subjects and reporting test results in a way that will facilitate FDA acceptance.

In addition to lower price tags, said Marlene Llopíz of Mexico-based CRO Venn Life Sciences, Latin American trials offer drug companies populations that: “see trials as a viable healthcare option to gain free medication” and have a rising incidence of chronic “life style” diseases, which are highly profitable to treat. Brazil and Mexico together have a pool of 13 million diabetics. No wonder BigPharma is rapidly shifting human drug studies from Europe and North America to Eastern Europe, India, China and Latin America, where, according to Oscar Podesta, a general manger at Chiltern International, a CRO serving 19 countries, standards are comparable and independent ethical review panels oversee patient rights.

Asked who pays the panels, Podesta responded: the drug companies. “How, then, can they be independent?”And there it came: “A great question, Terry, a great question. At the moment, yes, this is a challenge,” he said. “But the fact that fees are covered by sponsors has never been a problem.

The DIA, which sponsored the webinar, also describes itself as “independent.” It is supported by “meetings and members”—largely drug company representatives. A nonprofit, its 2008 revenues neared $38 million. But Podesta may have a point, albeit an unwittingly ironic one, when he says developing-world trial ethics meet U.S. standards. Take BigPharma’s latest serial scandal. A January congressional report on GlaxoSmithKline’s diabetes drug Avandia (annual sales $3.2 billion) found that GSK had been “intimidating scientists, ghostwriting studies for academic researchers, suppressing studies,” and that Avandia was associated with “83,000 excess heart attacks.”

“GSK had a duty,” the report concluded, “to sufficiently warn patients and the FDA of its concerns.” But GSK failed to warn, and the FDA has failed to act—beyond advising “concerned” patients to “talk to their healthcare professional.”

The webinar presenters acknowledged that off-shore trial ethics can be looser. “I would discourage the sponsor to try to run a study [in Latin America] just because they will not obtain approval in the EU or U.S.,” said Podesta, “but I’m not saying it cannot be done.”

“We receive a lot of [placebo] studies, unfortunately,” he said, that test a sugar pill against a new drug rather than pit it against a standard-of-care medication. This methodology, widely considered unethical, can leave half of test subjects to languish untreated. In Latin America, only Brazil and Argentina bar placebo trials.

Nor is it incumbent on CROs or their BigPharma bosses to report all trials to the FDA. The “first step” in the process, said Venn’s Llop’z, is a nondisclosure agreement that can allow companies applying for FDA approval to cherry pick trials that show favorable results, and to bury the less impressive or even fatal results.

Informed consent is the backbone of ethical trials, but patient protection loses meaning when subjects are desperately sick and poor, and have no other treatment options. Consent standards vary by country, rules for testing on children can be less stringent than in the United States, and language, educational and cultural differences can be used to mask dangers.

Clearly, some of the subjects may reap real health benefits, and companies may develop new drugs that save or improve millions of lives. But as Filipe Gonzales of the CRO Parexel said, Latin America, like the U.S., has no regulations covering patient care after a trial ends. What happens to desperate test subjects who served their function and are suddenly abandoned without access to life-sustaining treatment? And what about the thousands of patients who have died after taking billion-dollar blockbusters such as Avandia and Vioxx that the FDA approved based on manipulated studies?

Now, those are great questions.