Clinical trial sponsors conduct trials overseas for a variety of reasons. Without a detailed understanding of the local insurance regulations and an appreciation for how to mitigate and transfer risk properly, however, even the most diligent sponsor can make a misstep that heightens their potential liabilities or increases the risk of costly delays.

Biotechnology, pharmaceutical and medical device companies choose to sponsor clinical trials in other countries for a variety of reasons. The disease may be endemic to that region; trial data from a country may be required before the drug or device can be approved for sale there; it might be difficult to find an adequate pool of treatment-naïve U.S. trial participants; and comparable medical facilities may be available at a more competitive cost. While there may be compelling reasons to pursue a foreign trial, sponsors should ensure they have a well-designed, coordinated, regulatorily compliant global insurance program, coupled with a strong risk management process. Each host country has its own insurance laws, and the specific insurance requirements for clinical trials can vary greatly.

Insurance missteps heighten risks

The failure to comply with local insurance requirements can expose a sponsor to potentially significant regulatory sanctions and product liability claims. Insufficient limits and improper policy language may lead to delays in starting a clinical trial, or to the risk of having a trial shut down, which can lead to significant delays in obtaining approvals to bring life-saving and life-sustaining new products to market.

Sponsors should not rely exclusively on their U.S. policies to respond to foreign clinical trials. Many countries have compulsory insurance requirements which mandate that insurance be issued by an "admitted," or locally licensed, insurer. In such cases, a U.S.-based policy may not be able to provide payment for a claim. Sponsors also may risk violations of laws requiring taxes to be paid on claims involving losses in that country, regardless of whether payment is made outside of that country.