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.
Not only do insurance laws vary from country to country, there are often differences within a given country in how those laws are interpreted in practice. Policy wording may have to follow specific guidelines, but that wording may be interpreted differently by regulatory bodies, ethics committees, contract research organizations or site investigators. Requirements for extended reporting periods, for example, may depend on the drug or device being studied, as well as the interpretation of the guidelines by the relevant authorities. Partnering with an insurer who has a good understanding of local market customs helps trial sponsors negotiate effectively to mitigate their liability exposure.
In addition to the laws in place, sponsors should be aware of how changing regulations may affect a clinical trial. They should also understand how cultural expectations in a given country may affect claims and liability.
Contracts provide crucial protection
The contractual agreements the sponsor reaches with the contract research organization, the investigator and the site, and the trial informed consent documents, are crucial risk management tools for clinical trials, whether domestic or foreign. If sponsors do not pay close attention to the wording in these documents, they may inadvertently assume more liability, accept unnecessary indemnification provisions, agree to excessive insurance limits or expose themselves to avoidable liability risks.
A critical step in mitigating potential liabilities is to make sure that the informed consent form is appropriate for the specific trial, location and test subjects. Medical malpractice coverage should be provided by the sponsor to clinical trial contractors when they act in accordance with the protocol, but sponsors should avoid liability arising out of a clinical trial contractor's independent malpractice risk, and should ensure their business partners secure such insurance.
Local and global expertise
As the laws and customs differ from country to country, so do the exposures. The risks may be far greater in one country for a specific trial than in another. An insurer that has experience in providing coverage for clinical trials globally, and in the country where the trial will take place, can help sponsors navigate the very complex issues that can arise, and price the exposure accordingly.
While foreign clinical trials liability claims may not be frequent, they can be highly expensive. In a number of countries, injuries that occur during a trial may become a liability for the trial sponsor even if the injury is unrelated to the trial. Local expertise can be critical in managing claims in areas such as Africa, Eastern Europe and India. To minimize the claims exposure, it is crucial to understand the local legal procedures and to have established relationships with local counsel.
When deciding on a site for a clinical trial, sponsors need to understand all of the risks, including the often-complex insurance requirements. Foreign sites may present the best choice for a clinical trial, but choosing the right insurance coverage, and carrier, are critical considerations in making that decision.
To learn more about risk management and insurance considerations for foreign clinical trials, please download Chubb's full advisory, "Managing the Insurance Complications of Foreign Clinical Trials." The advisory offers information on the exposures arising from foreign clinical trials and how those trials may be affected by local insurance laws.
About Chubb
Chubb is the marketing name used to refer to subsidiaries of Chubb Limited, providing insurance and related services. For a list of these subsidiaries, please visit www.chubb.com. Chubb is the world's largest publicly traded property and casualty insurer. With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. The company is distinguished by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength, underwriting excellence, superior claims handling expertise and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London and other locations, and employs approximately 30,000 people worldwide.
Frank Goudsmit, CPCU, is senior vice president of Chubb Life Sciences. He can be reached at fgoudsmit@chubb.com. Lou Butler is assistant vice president for Chubb Global Services North America. He can be reached at lou.butler@chubb.com.
Any materials provided in this article are descriptive and advisory in nature and are offered as a resource to be used together with your professional insurance advisors. Chubb does not assume any liability by reason of the information contained herein. The information provided is not intended to be legal or other expert advice as to any of the subjects mentioned, but rather is provided for general information only. For such advice, you should consult knowledgeable legal counsel or other knowledgeable experts.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.