India’s top drug regulatory agency is charged by parliament panel report for violating laws and colluding with pharmaceutical companies to approve medicines without clinical trials.

The Central Drugs Standard Control Organization which oversees clinical trials and India’s 10,000 drugmakers, approved medicines from companies including Novartis AG (NOVN), GlaxoSmithKline Plc. (GSK) and Cipla Ltd. (CIPLA) without clinical trials required to be done in the country, the standing committee on health and family welfare said in a report tabled in parliament on May 8.

The committee also found that the drugs that were banned in the U.S., Europe and most developed countries because of their adverse side effects had been approved for sale in India.

“There is sufficient evidence on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts,” the report said. “Such irregular approvals spare drug producers the cost and efforts but put Indian patients at risk.”

The findings revealed the fact that the agency may be putting industry interests over public health, in a country where pharmaceutical sales have increased an average of 14 percent annually since 2005. The regulator is understaffed, overburdened with drug approval applications and ineffective at regulating drugmakers, the report said.

Systemic flaws ranging from lax oversight of clinical trials and the absence of a system to monitor side effects of newly introduced medicines have meant the agency lacks the authority of its counterparts like the U.S. Food and Drug Administration and the U.K’s Medicines and Healthcare Products Regulatory Agency.

“The rules for clinical trials are very lax inIndia,” reitertaed an activist who has filed a case in the country’s top court claiming irregularities in the way patients for trials are chosen. The rules and regulations in Europe and the U.S. are very strict. InIndiawe have so many loopholes that are exploited by pharmaceutical companies.

According to the report, several clinical trials approved by the agency didn’t have a representative mix of patients fromIndia’s main ethnic groups, rendering the data inconclusive. Such trials do not produce any useful data and merely serve to complete the formality of documentation.

These findings were based on a 1 1/2-year investigation of 42 medicines that were approved by the agency from 2004 to 2010. Of these, 31 new drugs were approved without conducting clinical trials on Indian patients.

At least two medicines, Paris-based Sanofi (SAN)’s dronedarone and aliskiran from Basel, Switzerland-based Novartis were approved on the basis of trials that were conducted on less than 50 people in India, even though the laws require a minimum of 100 patients.

The country has 92,000 brand names of registered pharmaceuticals, according to a compendium of medicines sold in the country. The World Health Organization, in contrast, recommends 340 essential drugs. About 90 percent of drugs sold are generics, which their manufacturers seek to differentiate with unique names — making them branded generics.