Expert Risk Articles

Clinical Trials Liability

Increasing competition among pharmaceutical companies worldwide means ever more clinical trials, driving increased demand for liability insurance cover.

Scientists have been predicting a global pandemic such as the recent H1N1 "swine flu" for a long time. With growing globalization and increased worldwide travel, illnesses can spread more quickly and further than ever before.


It's getting harder and harder for companies to find completely new treatments

Some say that we might experience pandemics more frequently in the coming years, and they may be more severe. The pharmaceutical industry is well aware of this threat and puts a lot of effort into the development of new drugs to help prevent such threats or cure existing or new diseases.

As a matter of fact, the industry’s research and development costs have been steadily increasing in the past years. "At the same time, however," explains AGCS liability underwriter Dr. Andreas Schaer, "it's getting harder and harder for companies to find completely new treatments. Generally speaking, most innovations today are improvements on existing medication."

The long road of R&D

In addition to that, pharmaceutical companies and research organizations face a number of challenges: conducting clinical research in multiple countries and on a global scale is inherently complex because of the many sites, cultures, and legislations involved; and there is a lot of pressure to speed up the development of new drugs.

The drug discovery and development process is complex, time-consuming, costly and entails a number of risks. With safety being of utmost importance in pharmaceutical development, there are very strict protocols that need to be observed before a new medication can be approved.

A crucial step in this process are clinical trials. To determine and warrant the safety and efficacy of a new drug or medical device, it needs to be tested on humans, in a strictly controlled environment.

It is not until all the phases of a clinical development program usually consisting of multiple Phase I, II and III trials have been successfully completed that the product can be approved and released into the market. Even after that, effects need to be closely monitored in selected patients for years to come.

4 Stages of Clinical Trials

A growth industry

Researchers conduct their studies on humans in four phases. Each phase involves more people and more elaborate examination of population segments such as age, gender, and race in order to determine the full effects of the new treatment. (See chart above).

"A clinical development program typically starts with a Phase I trial where safety and tolerability of new, investigational drugs are being tested in healthy volunteers. So if there are obvious side effects, they will most likely show up here," says Dr. Johannes Klose, AGCS scientific advisor for pharmaceuticals.

"Subsequent Phase II and III trials further investigate safety as well as efficacy of the new drug in patients," explains Dr. Klose. "As you progress from phase to phase and include more and more people, the likelihood increases that a rare side effect will also turn up. Therefore, each stage in clinical development has its own peculiarities."

There are literally tens of thousands of clinical trials taking place around the world today. Visiongain Research predicts 10 percent growth in this sector through 2018. Many trials take place in several locations at once, especially the Phase III trials designed to investigate safety and efficacy in large patient populations. Clinical trials represent a significant investment in people as well.

Therefore, a lot of surveillance is necessary, and regulators in most countries require that the so-called trial sponsors carry clinical trials liability cover in the event of trial-related injuries to trial participants. This reassures the people taking part and the lawmakers that patient protection and safety are key concerns.

However, each country will have its own regulators and legal requirements. As a result of all these factors, cover can become extremely complex and demands a very solid international program.

Controlling the risk

"Our clients are some of the biggest in the industry, and they face this issue on a regular basis," says Dr. Schaer. "For this reason, we can provide them with a solution in which they have an admitted insurance policy in foreign countries in the local language according to local standards."

Another key concern is speed. Clinical trials can take a great deal of time to design and for health authorities to approve. This can mean that the trial is ready to start just days before its actual launch date. It is in that small time window that the sponsor and the insurer must work together to develop the right cover because without it the study cannot begin.

"This happens frequently," comments Dr. Schaer. "Understandably researchers will be thinking science first and insurance second. But, of course, cover is essential, and we are able to respond to their needs to produce an insurance certificate within a couple of days."

Global challenges

With its in-house team of experts AGCS is able to come up with tailor-made solutions in a short period of time even for the most innovative clinical research program.

"We are constantly studying the latest medical developments so we have a deep knowledge across the different classes of drugs, indications and the side effect profiles of approved drugs and drugs currently in clinical development. This means we can address the risks of the studies very well," explains Dr. Annette Blumenthal, an AGCS scientific advisor in charge of pharmaceuticals and clinical trials.

The design and production of new or more advanced treatments for life-threatening or even simple illnesses such as the common cold is a challenge faced by the pharmaceutical industry all over the world, and will require a consistent and sometimes innovative approach from the insurance industry to support this.

"We at AGCS are best prepared to deliver such support," says Dr. Schaer. Clinical trials are likely to remain a "growth" industry just as the global medical industry is. The global challenge to produce new or more advanced treatments is being carried out all over the world. This will require both consistent science and consistent risk solutions.

Download "Global Risk Dialogue" fall 2009 (4 MB)