Fallout from a report by the Indian Parliament alleging widespread collusion and ineffectiveness at India's Central Drugs Standard Control Organization (CDSCO) continues, as the Indian government has launched a formal inquiry into the allegations, reports Reuters.

"The government said in a statement that it had appointed three experts to look at the scientific basis for approving new drugs without clinical trials and to recommend ways of overhauling the approval procedures," explains Reuters. "The experts have been given two months to report back to the government with their findings."

The report alleged widespread "collusion" between the industry and the CDSCO, understaffing at CDSCO, the violation of clinical trial guidelines, the approval of drugs without scientific evidence and the "gross violation" of a number of other laws and regulations.

Beyond India, notes Reuters, the investigation could prompt an investigation by the US Department of Justice (DOJ) into the practices of global drugmakers.

DOJ is already "conducting extensive inquiries into nearly every major drug and medical device manufacturer for potential violations of a US law that bars bribes to officials of foreign governments, the Foreign Corrupt Practices Act," Reuters said.

While conduct in Indian markets has not been the focus of major efforts by DOJ, new scrutiny could emerge in light of the Indian Parliament's report, which casts suspicion on a number of western pharmaceutical firms, including Novartis, Pharmacia, Eli Lilly and GlaxoSmithKline.

Read more:

Reuters - India to probe alleged irregularities at drug regulator

Reuters - India drugs inquiry could prompt new U.S. scrutiny

The Economic Times - Govt to probe alleged irregularities within drug regulator

The Economic Times - Pharmaceutical companies including Cipla deny charges of collusion with drug regulator in drug trials

Regulatory Focus - Indian Parliamentary Report Says Clinical Trials Not Being Conducted Properly