Running a US Clinical Trial in Australia: A Decision Framework for US Sponsors

For US life sciences companies considering where to run their next trial, Australia is a clear option. It is one of the most popular destinations for early-phase trials run by foreign sponsors, and for good reason. A refundable research and development tax offset returns up to 43.5 per cent of eligible trial costs as cash. First-in-human studies can begin without the full investigational new drug application that United States regulators require. The total cost of a trial is lower than sponsors typically face at home and the resulting data meets the international good clinical practice standards that major regulators, including the United States and Europe, already accept.

This article considers how an Australian trial fits into a United States regulatory and commercial strategy as part of a company’s decision-making framework.

Why companies choose Australia

The most significant factor is financial. Australia offers a refundable tax offset of up to 43.5 per cent on eligible research and development expenditure, including clinical trial costs, for eligible companies that conduct the R&D through an Australian entity or permanent establishment. Because the offset is refundable, a loss-making company, which most emerging biotechnology companies are, receives the benefit as a cash payment rather than a reduction in tax otherwise payable. The standard annual cap on the refund does not apply to clinical trial expenditure. For a company managing with finite cash, this operates close to a direct subsidy of early development. The settings are due to change from 1 July 2028, and we have written separately on those reforms (see The 2026-27 Federal Budget and Australia’s Clinical Trials Reform Agenda); the current rates remain in place for now.

Speed is the second advantage. Australia does not require an investigational new drug application of the kind the FDA requires before first-in-human studies, so the up-front documentation burden is lighter. For an early trial, the chemistry, manufacturing and controls information required is essentially what sits in the Investigator’s Brochure, rather than a full regulatory dossier. Ethics review runs in parallel with site governance, and approval timeframes are relatively brief by international standards.

Cost reinforces both points. The all-in cost of running a trial in Australia is generally lower than in the United States before the offset is taken into account, and the offset increases that saving further.

Quality is what makes the early work usable later. Australian trials are conducted to International Council for Harmonisation good clinical practice standards, and data generated in Australia is accepted in substance by the FDA and the European Medicines Agency. Australia also has high-quality hospitals and investigators, a diverse population suited to recruitment, and a southern-hemisphere calendar that allows seasonal trials, such as influenza or respiratory studies, to continue out of phase with the northern hemisphere.

The requirement that creates the legal work

A trial conducted in Australia must have a local sponsor that is an Australian legal entity.

A foreign company can either establish an Australian subsidiary, or appoint a local organisation, commonly a contract research organisation, to act as sponsor.

The sponsor carries substantial obligations and corresponding liability including obtaining approvals, comply with their conditions, provide an indemnity, and hold appropriate insurance. A company that establishes a subsidiary takes those obligations into its own group; a company that engages a contract research organisation pays to place them elsewhere. The better route depends on the company’s expected frequency of Australian trials, desired level of control, and risk appetite regarding liability. This is the decision on which sponsors most often need legal and tax advice.

The United States questions sponsors underestimate

The Australian side of the decision provides a compelling case for life sciences companies. The United States side should be considered carefully, and appropriate measures undertaken, to ensure the programme succeeds.

In 2026, US life sciences companies face two opposing pressures. Staffing reductions at the United States Food and Drug Administration have left sponsors concerned about review timelines, and some are looking offshore to keep early development moving. At the same time, the FDA has grown more sceptical of foreign data, and Congress has pressed it to go further. A company therefore has to weigh two questions at the same time: where the work can be done quickly and cheaply, and whether the resulting data will be accepted when it applies for US approval.

One of the most misunderstood aspects is the representativeness of data. The FDA has emphasised that the data supporting a marketing application should be representative of the United States patient population. It may seem that this counts against Australia, but the demographic comparison actually favours Australia. Australian clinical practice and standards of care resemble those in the United States, and the population is diverse enough that recruited cohorts are broadly comparable to American ones.

The more important point is one of geography rather than demographics. In its 2024 draft guidance on oncology multiregional clinical development programmes, the FDA set out a clear preference for United States and multiregional data and raised concerns about the falling proportion of US participants in multiregional trials. Its rules, in place since 1985, allow a marketing application based solely on foreign data to be approved only in limited circumstances, including that the data are relevant to the US population and that the FDA is able to verify them (21 CFR 314.106). A common mistake is to treat this as an impediment to conducting trials in Australia. The difficulty is narrower: a trial run wholly in Australia raises these concerns however representative its participants are, because it includes no US participants and no multiregional spread. The answer is to sequence the work, not to avoid Australia. Australia suits the early-phase and first-in-human work, while the pivotal, registration-enabling studies need US or multiregional enrolment.

Several other US-side issues deserve attention before a trial begins. Foreign data must still meet the FDA’s good clinical practice and data-integrity standards, which the agency verifies partly through cooperation with overseas regulators, so site selection and monitoring matter. Sponsors have historically opened a United States investigational new drug application voluntarily, even for a foreign study, because a US IND helps the FDA accept the resulting data (21 CFR 312.120). That calculation has shifted, because the FDA has signalled it may stop reviewing applications for foreign studies that have no connection to the United States, which removes a route to early FDA engagement that sponsors previously relied on.

Patent and exclusivity timing also need early attention. A US patent’s term runs from its filing date wherever the trials take place, and the patent term extension available under United States law restores only part of the time lost to regulatory review, so delay in reaching the US market erodes effective patent life. Because the United States awards patents to the first inventor to file, disclosures connected with a trial before the US filing can defeat patentability. These are issues for US patent counsel, and they should be settled before trials begin. Separately, where trial participants are located in Europe or parts of Asia, cross-border transfer of their health data brings its own legal requirements.

There is also a geopolitical factor, and it favours companies considering Australia. The current scepticism about foreign data is aimed at China, not at allied jurisdictions. The BIOSECURE Act became law in December 2025 as part of that year’s National Defense Authorization Act, a congressional committee has pressed the FDA to refuse China-derived trial data, and the agency has restricted new trials that ship cells from the United States to China and other countries it regards as hostile. Australia, by contrast, is a close ally whose data the FDA already accepts, which means a US company can pursue the cost and speed advantages of offshore early development without the regulatory and reputational exposure now attached to China.

Where Australia fits in a US programme

When the two sides of the decision-making framework are worked through, a clear pattern emerges. Australia is used overwhelmingly for early-phase and first-in-human work. The larger pivotal trials and the registration that follows tend to require United States or multiregional involvement, which follows from the FDA’s preference for US and multiregional data, and recent United States policy is drawing manufacturing and commercialisation onshore through tariffs on imported pharmaceuticals and FDA encouragement of domestic testing and manufacture. Australian work supports a US programme; it does not replace it.

For most emerging companies that is the right outcome rather than a limitation. Faster, cheaper early development moves an asset through its critical early stages on less capital, which brings forward the later US activity and improves the company’s chances of surviving to reach it. The cash returned through the tax offset can be redeployed at home. Australia, used for the right phase, makes a US company more capital-efficient without moving the core of its value chain offshore.

A practical sequence

A company considering Australia can work through the decision in a few steps. Confirm the phase and scope of the work, and whether early-phase activity is what is contemplated. Take Australian advice on current research and development tax eligibility, since the settings are due to shift in 2028. Decide between forming a subsidiary and engaging a contract research organisation as local sponsor. Align the investigational new drug, exclusivity and patent strategy with US advisers before trials begin. Settle the Clinical Trial Research Agreement, including the record-retention and registration obligations introduced with the latest good clinical practice standard, which applies in full in Australia from 13 January 2027.

How Opportuna Legal can help

Opportuna Legal assists international pharmaceutical and biotechnology companies running clinical trials in Australia. We advise on sponsor structuring, the choice between an Australian subsidiary and a contract research organisation, research and development tax eligibility, and the contractual arrangements that sit around a trial, and we work alongside a company’s United States advisers so that the Australian work supports the wider development strategy. If you are planning or running a clinical trial in Australia, contact Opportuna Legal.

Anthony Jarvis | Managing Partner, Opportuna Legal