Are Clinical Trial Ethical? Who Funds Clinical Trials?

This Clinical Trial Guide article explains who funds clinical trials and why they fund them. It also explores the question: Are clinical trials ethical?
Back January 26, 2023

This article explains who funds clinical trials and why they fund them. It also explores the question: Are clinical trials ethical? We will describe the organizations most often responsible for funding clinical trials, their motivations for doing so, and the ethical responsibilities they bear through their involvement in the studies they fund. For clarity, the institutions discussed here are not the institutions that are actually conducting the study, but rather bodies that provide the means to medical researchers so that they can conduct the work.

Sources of Funding

The National Institutes of Health (NIH) is globally the largest funder of biomedical research. This institution is the spearhead for funding clinical trials and grants, on average, 32 billion dollars a year to fund research on progressive treatments and drugs, health, and disabilities (“About Grants”). NIH is funded through tax dollars and awards funding to researchers based on a selective application process in which applicants must explain the timeline of the proposed study, their approach to the study (i.e., how it will be conducted), and the significance of the study, among other considerations before being selected for funding (“Clinical Trial-Specific Review Criteria”).
Being a publicly funded institution, the NIH and its research directives are motivated by the most pressing issues in public health. The NIH expresses that its goals are to:

  • foster fundamental creative discoveries, innovative research strategies, and their applications as a basis to advance significantly the Nation’s capacity to protect and improve health;
  • develop, maintain, and renew scientific human and physical resources that will assure the Nation’s capability to prevent disease;
  • expand the knowledge base in medical and associated sciences in order to enhance the Nation’s economic well-being and ensure a continued high return on the public investment in research; and
  • exemplify and promote the highest level of scientific integrity, public accountability, and social responsibility in the conduct of science. (“About the NIH”)

The NIH is the national pillar in the U.S. medical sciences dedicated to the nation’s health and once a grant is awarded, the organization will oversee the research being done, ensuring compliance with federal regulations for the ethical conduct in scientific research as well as proper treatment of trial patients.


The U.S. Food and Drug administration (FDA) is the country’s federal authority and regulatory body for medical devices, vaccines/biologics, and controlled drugs among other regulated items in the United States. The FDA funds anywhere from 60 to 85 ongoing projects at a time and grants about $10 million to the continuation of those studies already under way and will allocate about $5 million to the initiation of new studies annually (“FAQs – Clinical Trials Grants”). This money comes from the administration’s Office of Orphan Drug Development (OOPD). An Orphan Drug is a product that is “intended to treat conditions that are too rare for ordinary capital investment, i.e. the treatment’s developmental cost outweighs the monetary benefits after its release for public use.” (“What is an Orphan Drug?”). The OOPD funds clinical trials that explore the development of drugs intended to treat or diagnose rare diseases or conditions as well as a natural history program that studies the history of the conditions in question.

In addition to funding clinical trials through the OOPD, the FDA is also charged with overseeing the ethicality and safety concerns associated with clinical trials. It has developed extensive legislation and regulations surrounding the conduct of clinical trials and protection of human subjects as administered and enforced by Institutional Review Boards (IRBs). Naturally, the projects funded by the FDA (as well as all other clinical trials) are bound to operate within this legal code of ethics protecting any subject participating in the trial (“Basics About Clinical Trials”).

Non-Profit Sector

Non-profit foundations are also key players in the funding of clinical trials. These foundations, however, do not often fund whole projects and provide a relatively small portion of monetary resources for research. Regardless, they are very valuable in the world of clinical trials due to their fiscal flexibility and function mostly as “crucial support in filling gaps in the research agenda that have not been addressed appropriately or profitably by government or industry.” (“Clinical Research Funding and Infrastructure”). In plain language, they supplement larger grants and focus more heavily on developing novel areas of investigation.

There are two main types of non-profit foundations that fund clinical research: VHAs and MROs:


VHA stands for voluntary health agency. These organizations are commonly referred to as operating foundations and often have an affiliation with a specific condition or medical issue. Examples of VHAs are the American Cancer Society, the American Heart association, the March of Dimes-Birth Defects Foundation, the Muscular Dystrophy Association, among many others. These foundations function in a similar way to charities and operate on donations from the public. These public funds are allocated toward use in a clinical trial setting, but also are used in organization specific programs that help to promote education, public awareness, and to assist in governmental lobbying.


An MRO is a medical research organization. These organizations operate in a similar fashion to a VHA; however, they are required to affiliate a portion of their spending on clinical trials with a hospital. The largest such institution is the Howard Hughes Medical Institute.

The motivations of nonprofit organizations in funding clinical trial research are often organization specific, focused on abatement, treatment, or curing the disease they are associated with. As such, they are much less broadly motivated than those associations affiliated with the upkeep of public health such as NIH and FDA. Additionally, nonprofit funding is often based on personal connection, for example, when a scientist and a donor establish rapport.

Pharmaceutical Companies

The pharmaceutical industry researches, develops, and subsequently sells novel drugs or treatments for conditions. These companies are independent of any public funding and function similarly to any other largescale corporation. This industry is the largest funder of clinical trial research and their expenditures total about $180 billion as a collective annually on research (Mikulic). Examples of these companies are Bristol-Meyers Squibb, Johnson & Johnson, and Pfizer.

It is important to recognize that the motivations behind research in pharmaceutical companies inherently differs from that of publicly funded institutions. While the pharmaceutical industry exists in order to help develop novel treatments to diseases and ailments and, thus, are motivated in part by the maintenance of public health, they are also large corporations and must also make money on the products they put to market.

Due to these marked monetary interests being tied up in drug development, there exists a skepticism in the research community about biases within pharmaceutical clinical trials. This fear is sparked by the fact that these companies are motivated by sales in addition to a successful drug development, therefore giving them incentive to present data in a way that might make a drug look more successful than it really is in order to make back the money the company has invested in its development. Other places where biases might exist in pharma studies is in their investigators, who are compensated based in part on the success of the drug as well as incentivized in numerous ways by the companies to develop successful drugs. Such a dynamic can potentially undermine objectivity by rewarding those who produce results most favorable to the sponsor’s interests”(Chopra). Another thing to be aware of is that, despite the potential benefits new drugs from pharma companies represent to both their trial patients and the public, the monetary obligation these companies have can often outweigh their obligation to the public and studies can be terminated for financial reasons independent of how well a drug is working.

There are, however, measures to combat the potential pitfalls of pharma-backed research, specifically in the form of medical journal editors and reviewers. All research submitted to journals must conform to CONSORT (Consolidated Standards of Reporting Trials), a set of rules established to limit the ways in which data can be presented in order to avoid misrepresenting trial results. Additionally, the International Committee of Medical Journal Editors (IMCJE) does not accept research that is conducted under contractual clauses denying researchers the ability to independently report results from clinical trials. IMCJE also requires statements disclosing the relationship between researchers and their corporate sponsors (Chopra).

Despite these caveats in the motivations of pharmaceutical company clinical trials, the subjects are still protected under FDA ethics legislation and the trials are still overseen by Institutional Review Boards and will be conducted ethically.

Hospital Systems

Hospitals and clinics are another body under which clinical trials are often conducted. The advantages of trials in this setting are multifold and mutual for both subject and researcher, as the subject is given both general care supplemented with the experimental care and the researcher has access to a diverse and stable pool of subjects with the desired traits for their trials. These trials are often funded by the institutions themselves in conjunction with external sources, such as the MROs discussed in a previous section.
These types of studies are mostly motivated by care initiatives and are often focused on types of care that hospitals can offer. This is mostly due to the setting in which they are conducted and if a clinical trial goes well, the trial will serve as a model for integration of the care method into regular hospital practice (Institute of Medicine Forum on Emerging Infections). The institutions that offer clinical trials are referred to as Academic Medical Centers. They provide care to patients as well as a setting in which to conduct clinical research. An example of an Academic Medical Center is the Mayo Clinic, which serves an established model for this kind of high-powered patient care in conjunction with globally recognized and cutting-edge clinical research.


While the government does play a role in the funding and proliferation of clinical trial research, the specifics of government involvement will be touched on later in an expert testimonial on the subject.

Will I Have Any Out-of-Pocket Expenses?

Now that you know how the trials themselves are funded, you might be curious to know whether you will have to pay any fees or have any expenses for your participation. The answer depends on whether you will be required to travel elsewhere for participation. If you need to move to a location away from home in order to join a clinical trial, most trials do not recompensate the participant for costs associated with moving, such as travel, housing, food, and transportation (“Paying for Clinical Trials”). Some clinical trials, however, pay participants for their involvement in the trial which can help with these expenses, but this will not be true for all studies, and you should keep this in mind if monetary compensation will be an important factor for you.
Should you need hospital care during your tenure as a subject in a clinical trial, your insurance company is legally bound to cover routine care costs in addition to necessary costs required by the trial you choose to participate in under the Affordable Care Act (Ryerson).  However, there are certain conditions to this coverage. These include:

  • You must be eligible for the trial
  • The trial must be an approved clinical trial
  • The trial does not involve out-of-network doctors or hospitals, if out-of-network care is not part of your plan (“Insurance Coverage and Clinical Trials”).

Furthermore, most insurance plans will not limit care or interfere with your participation should you choose to join a trial. It is important, also, to note that health coverage plans that existed before 2010 (when the Affordable Care Act was passed) might not cover expenses associated with clinical trials due to their stipulations being grandfathered out of the Affordable Care Act (“Insurance Coverage and Clinical Trials”). You should check with your provider about your specific coverage before joining a clinical trial in order to ensure that routine costs will be covered throughout your participation in the trial.
Any costs associated with the trial itself (testing, sample processing, equipment usage, etc.) will be covered by the sponsor of the trial.


This section has explored the funding sources and organizations that allow clinical trials to be conducted as well as the general motivations behind each type of funder. This is to indicate to you that there are options when it comes to whose trial you participate in and how the information you help provide will be brought about and distributed—as public information, as a company’s product, or as a hospital care option. It is important to keep your best interests in mind when selecting an appropriate clinical trial and we hope that this chapter will have provided some context on how you can best align your needs and desired research setting with the trials you might participate in. Hopefully, this information will help you narrow down your search for the clinical trial that suits you best.

Works Cited

“About Grants.” National Institutes of Health, U.S. Department of Health and Human Services,

“About the NIH.” National Institutes of Health, U.S. Department of Health and Human Services, 7 July 2015,

“Basics About Clinical Trials.” U.S. Food and Drug Administration, FDA, 12 Sept. 2014,,protect%20participants%20from%20unreasonable%20risks

Chopra, Sameer S. “Industry Funding of Clinical Trials: Benefit or Bias?” JAMA, JAMA Network, 2 July 2003,

“Clinical Research Funding and Infrastructure.” Careers in Clinical Research: Obstacles and Opportunities., U.S. National Library of Medicine, 1 Jan. 1994,

“Clinical Trial-Specific Review Criteria.” National Institutes of Health, U.S. Department of Health and Human Services,

“FAQs – Clinical Trials Grants.” U.S. Food and Drug Administration, FDA,

Institute of Medicine (US) Forum on Emerging Infections. “Conducting Basic and Clinical Research in the Managed Care Setting.” Managed Care Systems and Emerging Infections: Challenges and Opportunities for Strengthening Surveillance, Research, and Prevention: Workshop Summary., U.S. National Library of Medicine, 1 Jan. 1970,

“Insurance Coverage and Clinical Trials.” National Cancer Institute, National Institutes of Health, 6 Feb. 2020,

Mikulic, Matej. “Top Pharmaceutical Companies R&D Spending Share Worldwide 2026.” Statista, 4 Sept. 2020,,over%20230%20billion%20U.S.%20dollars

“Orphanet: About Orphan Drugs.” What Is an Orphan Drug?, Orphanet,

“Paying for Clinical Trials.” OncoLink, University of Pennsylvania, 27 Aug. 2020,,with%20local%20resources%20and%20referrals

Ryerson, Nancy. “Do Patients Have to Pay for Clinical Trials?” Clinical Trial Patient Recruitment, Antidote, 21 June 2020,

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