Liability and liability insurance

Growing competition in the drugs and pharma industry drives companies to discover new solutions or cures to dreaded diseases or degenerative conditions. In this environment, the commercial advantages to the firm that produces the first approved drug for a disease that affects a large patient population can be enormous.

However, the process of introducing drugs to the market is well-regulated, for obvious reasons. Before a new drug can be introduced in any market, it must first be approved by a statutory agency like the Food and Drug Administration. In most instances, the agency will require a clinical trial to be performed to demonstrate both the reasonable safety and efficacy of the product under consideration. Stringent regulatory requirements and competitive pressures are motivating life science companies to sponsor clinical trials more often.

Trials often require large numbers of human participants to best evaluate the effectiveness and long-term safety of a drug or device. When all inclusions and exclusions criteria are met, an "informed consent form" is given to the participant. Informed consent is a written and signed agreement required for participation in a clinical trial. It provides the participant with key facts about a clinical trial, including the purpose and length of the study, required procedures, as well as possible risks and benefits.
Clinical trials follow strict requirements (protocols) of how a study is carried out. Protocols may require a treatment to be examined alone or compared with a placebo (sugar pill) or a treatment that is already known. Or, a trial may be designed to show how an already known treatment can be used in a new way. Protocols also describe who may participate in the trial, t~e schedule of tests, procedures, medications and dosages, and the length of the study.

While a trial is in progress, participants are regularly seen by doctors and research staff who monitor the participants' health and closely follow the safety and effectiveness of the treatment.

Phases under Clinical Trials:

Subsequent to positive pre-clinical trials conducted in laboratory on animals, researchers develop a clinical trial protocol (plan) for testing on people, in phases:
. Phase I ) determines the safety of a treatment that showed positive results In laboratory and animal studies. Drug metabolism and safety are tested in a small group (20-80) of patients or healthy volunteers.
. Phase II ) tests the effectiveness (efficacy) of a drug or procedure on a disease or condition in a larger group of 100-300 patients.
. Phase III ) tests a drug or procedure among 1,000-3,000 participants. Its risks and benefits are evaluated and compared with standard, proven treatments.
. Phase IV ) tests a newly approved drug or procedure for optimal use or efficacy in the treatment of another disease or condition.

Clinical Trials Liability Insurance: Conventional Products Liability Insurance does not normally include the liability due to an unproven, unregulated product in its testing stages. These potential liabilities have created the need for a separate Clinical Trials Liability Insurance.

To obtain this insurance, a detailed questionnaire has to be filled in. The basic criteria of underwriting are:

1. The preliminary Permission from the statutory authorities to be obtained prior to commencement of the trials.
2. Clinical Trials to be held strictly in accordance with established conventions like Geneva Convention
and World Medical Association -Declaration of Helsinki, etc.

Basis of Rating:

Clinical Trials insurance is very complex and the premium rating may not lend itself to being explained in simple terms. However, factors like the technology employed in the drug or medicine, the area of operation of trials, the indemnity limits opted, the protocol chosen, the general claims experience of this particular class of drugs locally and elsewhere, the size of research subjects are some of the criteria on which the rating may depend.

The Cover:

Besides the overall limit of anyone accident and anyone period, the policy may specify detailed sub-limits like per Research Subject for Clinical Trials, Professional Indemnity Insurance for Principal Investigators and number of Research Subjects per location, etc.
The Policy indemnifies the insured against all sums that the Insured shall become liable to pay as damages or compensation and claimants' costs and expenses in respect of any claim made by Research Subjects for bodily injury caused by an occurrence during clinical trials.

Exceptions under the policy:

The usual exceptions are war and war like perils, radioactive and nuclear perils, diseases like AIDS, etc which are typical exceptions for any insurance policy. Besides, mental injury, mental anguish, shock of Subjects is out of coverage of these policies.
Conditions of Compensation to Subjects The prerequisite for the compensation to be paid is proof beyond doubt that the injury or aggravation of the existing condition was caused by the administration to or use by the Research Subject of any drug or product involved in the Trial or was directly attributable to participation in Trial.
Compensation would also be given to the Research Subject who may not be receiving the drug or product under Trial but there is an injury or aggravation of the existing condition because of withholding of treatment, which he was undergoing or caused by the administration of a placebo.
Although the Research Subject was warned of the risk before the trial and he has signed an "informed consent" agreeing to participate in the Trail voluntarily, in case of injury from a foreseeable adverse reaction, compensation would normally be paid. However, compensation will not be paid for the failure of a drug or product under Trial to perform its intended purpose.
In case of negligence proved on part of the Research Subject, the compensation may either be denied or reduced depending on the circumstances.