As the FDA considers penalizing¹ companies for running early-stage clinical trials overseas, it is aiming at the wrong problem. The real issue isn’t the flight of clinical development to nimbler jurisdictions; it’s that the U.S. makes even the lowest-risk human studies slower, costlier, and more centralized than they need to be.²

What’s been overlooked is that the FDA already has the power to fix this. Without new legislation, pilot programs, or years of rulemaking, the agency could use enforcement discretion to create a fast, risk-based pathway for low-risk early-stage trials—much like systems already operating successfully in Australia and the U.K.

The result would be more first-in-human studies conducted in the U.S., better use of limited FDA resources, and a meaningful boost to American biomedical innovation.

Some brief background is useful. Under current FDA practice, virtually all new drug trials are funneled through the same regulatory pathway: a full IND application, GMP-grade manufacturing, and intensive FDA oversight. This applies equally to a 10-person microdose study and large, late-stage pivotal trials. It is a one-size-fits-all approach that few would design intentionally today, and its effect is to concentrate oversight in ways that add cost and delay without improving safety.

Lately these inefficiencies have been magnified by staffing shortages, particularly among FDA reviewers. With limited capacity, treating all trials as equally risky inevitably diverts attention away from genuinely high-risk activities, such as inspecting overseas manufacturing facilities or investigating serious data-integrity violations (recent inspections of overseas generic drug facilities turned up lizards and cats, and shortcomings in overseas inspections are blamed for fatal manufacturing data fraud³).

The outcome is predictable: slow trial starts, elevated costs, and a migration of first-in-human studies to countries like Australia, where regulatory systems distinguish more carefully between low- and high-risk research. A low-risk trial in Australia can start up in just 4–6 weeks.⁴ Likewise, the U.K. just implemented a “notification scheme” that allows certain low-intervention trials to proceed within as little as 14 days.⁵ China has cut—and continues to further cut—regulatory review timelines.

These international examples are not outliers, nor do they rely on weaker safety standards. They reflect a common regulatory principle: oversight calibrated to risk.

Far from being foreign to the U.S. system, that principle already underpins how American regulators supervise other complex, high-stakes domains — including ones where public trust and market integrity are paramount. Securities law provides a useful example. SEC exempts certain low-risk capital-raising activities from the extensive requirements of a public IPO. Offerings conducted entirely within a single state or limited to sophisticated investors, for example, may proceed under streamlined exemptions such as Rule 147A or Regulation D. This is not deregulation: federal anti-fraud rules remain fully in force, and state “blue-sky” laws continue to apply.

The result is a system that calibrates oversight to risk: large, high-stakes capital raises (IPOs) to the most intensive scrutiny, while allowing smaller, early-stage investments (angel rounds; startups) under lighter but still meaningful safeguards. That balance creates the world’s deepest public capital markets and its most vibrant ecosystem for startup investing—the envy of the world. Tiered oversight based on risk, in other words, is not a radical idea but a familiar and successful U.S. regulatory pattern.

What might an analogous system look like in practice for the FDA? Borrowing from Australia’s model, the FDA could simply create an IND exemption for low-risk, early-stage trials—call it, “Reg D for blue-sky research.” Such a framework might look something like this:

• Accredited IRB oversight with the same oversight and reporting obligations they have today.⁶
• Streamlined submission comprised of the clinical protocol, investigator’s brochure, and the informed consent form (just like Australia).
• Clear eligibility boundaries, excluding higher-risk modalities such as cell and gene therapies (just like Australia).
• A rapid, notice-only filing with the FDA, submitted through existing electronic systems and assigned a placeholder IND number (just like Australia).

In effect, this approach would formalize a role that local IRBs already play, deputizing them to free up FDA staff time for higher-stakes activities. Australia’s experience shows this delegation can be done safely and efficiently, without compromising participant protections.

Reg D for blue-sky research

The most consequential point is also the simplest: none of this would require new legislation or formal rulemaking. The FDA already possesses the necessary authority and has repeatedly used it to encourage innovation through enforcement discretion — the decision to decline strict enforcement of certain regulatory requirements in defined, low-risk contexts.

A recent example is fecal microbiota transplantation for recurrent C. difficile infection. For years, the FDA maintained that FMT constituted a biological product requiring premarket approval, yet publicly exercised enforcement discretion⁷ to allow clinical use and continued development. That flexibility proved productive. Today, two FDA-approved therapies—Rebyota and Vowst—are on the market, supported by the very clinical evidence generated during that period.

And this policy tool is not limited to narrow or experimental settings. Federal enforcement discretion also played a central role in the de facto legalization of marijuana across many states, demonstrating the breadth and durability of this approach when agencies judge strict enforcement to be misaligned with risk, capacity, or public interest.

Early-stage clinical exploration merits similar treatment. These studies are typically small, carefully monitored, and limited in scope. They generate foundational scientific knowledge while posing little relevance to commercial drug distribution—precisely the kind of setting in which the FDA has previously applied regulatory discretion to good effect.

Sources

1. https://www.fda.gov/media/189873/download?attachment
2. https://en.wikipedia.org/wiki/Eroom%27s_law#:~:text=The%20'cautious%20re
3. https://a.co/d/b5yRqdQ
4. https://novotech-cro.com/sites/default/files/2020-02/Australia Reg and Tox requirements_March 2020.pdf
5. https://www.gov.uk/government/news/uk-clinical-trial-approval-times-twice-as-fast-with-ai-and-reforms#:~:text=lower%2Drisk%20studies%20to%20be%20approved%20in%20just%2014%20days
6. https://www.fda.gov/about-fda/cder-offices-and-divisions/institutional-review-boards-irbs-and-protection-human-subjects-clinical-trials
7. https://www.fda.gov/vaccines-blood-biologics/safety-availability-biologics/information-about-fecal-microbiota-transplantation