July 2006
This article is an excerpt from the July 2006
Biotech Briefing newsletter of the ABA Section of
Science & Technology Law. Full copies of the
newsletter may be obtained by calling the
Section Office at 312/988-5599.
Life Sciences Companies and Liability
Insurance for
Clinical Trials Conducted Abroad
David T. Case, Julia Reynolds Johnson,
and Anand D. Nair
I.
TGN1412: The Clinical Trial
According to published reports, on
March 13, 2006, eight men took part in a phase
one clinical trial at a hospital in London. In
particular, six of the men received doses of
TGN1412, a monoclonal antibody developed by
TeGenero AG (“TeGenero”), a German
pharmaceutical company, and two were given a
placebo.1 The hope was that TGN1412 would
stimulate the immune system and could
ultimately be used in the treatment of diseases
such as leukemia, rheumatoid arthritis, and
multiple sclerosis.
Parexel International
(“Parexel”), a U.S.-based company, was to
administer the clinical trial.
Reports also indicate that this was the
first time that the experimental antibody had
been tested on humans, although tests had been
conducted on monkeys at a dose five hundred
times greater than that at the clinical trial.2
Shortly after the drug was administered,
participants reportedly suffered severe chills,
pain, and nausea, as well as swelling of the head
and body.3 As reported, TGN1412 had caused
“cytokine release syndrome,” and the six
individuals had suffered organ failure and
complications.4 Reports further state that there
are concerns of long-term damage, with the men
susceptible to autoimmune diseases and
tumors.5
II.
Possible Claims
The Medicines and Healthcare Products
Regulatory Agency (“MHRA”) investigated the
trials and concluded that the harm to the
participants was an “unexpected biological
effect,” rather than the result of any human error
in
the
manufacture,
preparation,
or
administration of the drug.6 While it is unclear
how the injured men will proceed, they have
retained attorneys, and given the extent of
injuries, TeGenero and Parexel could face
claims.7
Reports state that TeGenero obtained a
clinical trial liability insurance policy from
Gerling Insurance, a German insurer. The policy
reportedly has a £2 million policy limit, an
amount which some doubt will be sufficient to
compensate the six participants.8 It also appears
that Parexel was insured under TeGenero’s
policy.9 Although the MHRA did not find that
any actions by Parexel contributed to the
injuries, the attorney for four of the participants
is said to be considering a claim against
Parexel.10 Accordingly, it is possible that Parexel
could face claims in the U.S., which raises
additional coverage questions.
Thus far,
TeGenero’s insurers have reportedly paid at least
four of the participants ƕ10,000 each.11
The events surrounding the TGN1412
clinical trial should be of interest to many life
sciences companies based in the United States,
highlighting issues concerning the conduct of a
clinical trial and the nature of informed consent.
to cover the trial.21 In addition, some countries,
such as Norway, France, and Germany, require
“admitted” insurance, meaning the policy must
be written and issued by an insurer licensed to
do business under the insurance laws of that
jurisdiction.22
Even in jurisdictions that do not require
clinical trial liability coverage, an IRB or
comparable ethics committee may impose an
insurance
requirement.23
In
such
circumstances, policies addressing clinical trials
may need to be modified by endorsement to
provide coverage for the foreign trial. Moreover,
policyholders must be aware that an insurer may
sometimes place a cap on the amount of
worldwide coverage for any particular drug or
medical device.24 Finally, the policyholder must
be aware that only a handful of insurers have
entered the foreign clinical trials liability market,
including Chubb, ACE, CNA and AIG.25
C. Possible Issues in Foreign
Clinical Trial Insurance
Policies
No matter whether the policyholder is a
sponsor, CRO, or investigator, the policy terms
covering foreign clinical trials vary widely, and a
policy must be reviewed carefully. Thus, with
the advice of counsel, a life sciences company
should compare coverages afforded by different
insurers to determine which policy best meets
the company’s particular needs.
Although coverage issues will depend on
specific policy language, one specimen policy
form addressed clinical trials that cover “bodily
injury and property damage in connection with a
human clinical trial.”26 The specimen policy also
defined a “human clinical trial” as the “[t]esting
of material upon or within human beings to
establish the effectiveness or safety of such
material.” Moreover, the material being tested
must be a “life science product,” which is defined
as a “cosmetic, dietary supplement, drug or
medical device.”
Any policy will contain exclusions, and
the policyholder, or its counsel, should review
such exclusions carefully. For example, one
policy form purports to exclude bodily injury or
property damage occurring after a government
or regulatory authority has: (1) placed the trial
on hold; (2) withdrawn approval of an
Investigational New Drug Application or
Investigational Device Exception Application; or
(3) ordered the trial to be discontinued. The
policy form also defines a human clinical trial to
include “[t]he providing of the information
Time will tell if lawsuits are filed against
TeGenero or Parexel, but the results of this
clinical trial also underscore the need for
insurance coverage analysis in the context of
foreign clinical trials.
III.
The Increase in Foreign Clinical
Trials
Published statistics show that clinical
trials are a critical part of the research and
development
budget
for
life
sciences
companies.12 Moreover, over the past few years,
life sciences companies based in the United
States have dramatically increased their use of
foreign clinical trials.13 Commentators have
posited several reasons for this growth,
including a focus on treatments for conditions
more common overseas;14 overseas venues that
may offer more cost-effective trials;15 and foreign
venues that may offer a quicker study approval
time.16 Whatever the reason for the increase,
foreign clinical trials are likely to continue to
play an increasing role in the development of
new medicines.17
IV.
Insurance Coverage for Foreign
Clinical Trials
A. The Process and Parties
As more companies conduct clinical
trials abroad, each involved entity must be aware
of the requirements concerning liability
insurance in the country where the trial is being
conducted.
These involved entities should
include the sponsor; any contract research
organization (“CRO”) investigators conducting
the trial; and any involved Institutional Review
Board and its members (“IRB”).
B. Selecting an Appropriate
Insurer
Certain threshold issues should be
analyzed in assessing insurance coverage for
clinical trials.
An initial consideration is
whether the jurisdiction where the trial will be
held requires the sponsor to purchase insurance
to cover the trial. Some countries, such as the
United Kingdom, do not require clinical trial
liability insurance.18 However, fifteen countries
in Europe, including France, Germany, Spain,
and Italy, require such insurance, and ten of
those countries require specific policy terms.19
For example, Germany has a minimum limit of
500,000 euros per person, with a cap based on
the number of participants in the trial, which
could be as high as 15 million euros.20 Thus, in
certain jurisdictions, a company conducting a
clinical trial involving several hundred
participants would need substantial policy limits
2
clinical trial liability coverage, at least for trials
involving drugs not previously tested on
humans.30 Depending on the resolution of the
TeGenero trial and how much continued
attention the story receives, insurers may
increase premiums for all clinical trials.
Notably, however, Gerling Insurance has
indicated that it will not cease underwriting
clinical trials as a result of the TeGenero
incident.31 Second, there is speculation that the
United Kingdom will move toward requiring
insurance for all clinical trials.32 Indeed, the
TeGenero trial may lead other countries to
require insurance, or to establish or increase
minimum policy limits for such coverage. And
third, sponsors should be aware that insurers
will almost certainly increase their scrutiny of
potential insureds, and may, for example, review
the informed consent form that would be used
during the trial.33
VI.
Conclusion
Pursuing insurance coverage for foreign
clinical trials will help address some of the
financial and legal risks involved in conducting a
clinical trial overseas.
Yet, for a clear
understanding of the scope of coverage,
insurance policies must be carefully analyzed by
the policyholder, broker, and counsel.
David Case is a partner and Julia
Reynolds Johnson is Of Counsel in the
Washington, DC office of Kirkpatrick &
Lockhart Nicholson Graham LLP (“K&LNG”).
They regularly advise policyholders regarding
insurance coverage issues. Anand Nair is a
third-year law student at American University.
The views expressed herein are not necessarily
those of the clients of K&LNG.
____________________________
necessary to obtain the informed consent of
human beings to participate in such testing; and
other activities in connection with the testing”
(emphasis supplied). Thus, to avoid potential
coverage issues, life sciences companies should
strive to ensure that the consent document is
comprehensive, but understandable.27 The FDA
has rules addressing informed consent, but a
policyholder must carefully consider whether
information on financial arrangements should
be included. Looking only from the insurance
perspective, trial participants must demonstrate
consent through written documentation.28
Indeed, the TeGenero trial illustrates
how issues of informed consent can impact
coverage. In particular, according to reports, the
relevant consent form apparently lists cytokine
release syndrome as a risk, but at least one
participant contends that there was little time to
review the consent form before the trial began
and that no one explained the risk of serious
injury.29
The sample policy also has a separate
sub-limit of liability for medical expenses for
accidental bodily injury resulting from the trial.
Such coverage applies, however, only to an
accident occurring during the policy period, and,
further, the expenses must be incurred and
reported within one year of the accident.
Furthermore, by its terms, the sample policy
applies only if:
1. the insured makes all filings that the
insured is required to make under
all applicable laws and regulations
and
receives
all
necessary
authorizations
in
connection
therewith;
2. the trial is approved by the
appropriate institutional review
board or similar organization; and
3. the insured has not recklessly or
willfully violated or consented to a
violation of any agreement, contract,
law,
procedure,
protocol
or
regulation applicable to the conduct
of the trial.
An entity purchasing this policy would want to
be especially careful to make all necessary filings
and to obtain the necessary approvals to avoid
potential disputes with the insurer.
V.
Implications of the TeGenero Trial
The TeGenero trial is already impacting
insurance coverage at many levels. First, at the
most basic level, one insurance broker has noted
a 50% increase in insurance premiums for
1 Medicines and Healthcare Products Regulatory Agency,
Investigations Into Adverse Incidents During Clinical Trials
of TGN1412 [hereinafter MHRA Report], available at
http://www.mhra.gov.uk/home/idcplg?IdcService=GET_FI
LE&dDocName=CON2023821&RevisionSelectionMethod=L
atestReleased.
2 Elisabeth Rosenthal, When Drug Trials Go Horribly
Wrong; Parexel Case Shocks Research World, Int’l Herald
Trib., Apr. 8, 2006, at 1.
3 Victims of Drug Trial Get GBP 10k Handout, The Express,
Apr. 28, 2006, at 23.
4 Frances Gibb, Drug Company Offers £ 5,000 If Victims of
Trial Agree Not to Sue, The Times (London), Apr. 19, 2006,
at 24. See also Rosenthal, supra note 2.
5 Clare Dyer, Medical Trial Victims Receive Interim Payouts,
The Guardian (London), Apr. 28, 2006, at 7.
6 The MHRA concluded that “an unpredicted biological
action of the drug in humans is the most likely cause of the
adverse reactions in the trial participants.” See MHRA
Report, supra note 1. See generally Nuala Moran, MHRA’s
Report on TeGenero Trial: Mostly, Nothing Wrong,
BioWorld Today, May 26, 2006.
3
Committee Leadership:
Chair
Erika Lietzan
See Gibb, supra note 4.
See Dyer, supra note 5.
9 We are not aware of any additional insurance policies
covering Parexel, although it is possible that it has such
insurance.
10 See Dyer, supra note 5.
11 Id.
12 Clinical Trials Consume 37% of Pharmaceutical R&D
Spending, Obesity, Fitness & Wellness Week, July 24, 2004,
at 659.
13 Id.
14 For example, numerous HIV/AIDS clinical trials take place
in sub-Saharan Africa due to the high incidence of HIVinfected individuals. See Ester Chang, Fitting a Square Peg
Into a Round Hole?: Imposing Informed Consent and PostTrial Obligations on United States Sponsored Clinical Trials
in Developing Countries, 11 S. Cal. Interdisc. L.J. 339, 342
(2002).
15 See Clinical Trials in Low-Cost Countries Could Mean
Huge Savings, Washington Drug Letter, Aug. 9, 2004.
16 Frank F. Goudsmit, Cesar Rios and Jill Wadlund, Insuring
International Clinical Trials: Navigating the Quirks and
Avoiding the Quagmires, J. Biolaw & Bus., Vol. 8, No. 3,
2005, available at http://
www.chubb.com/businesses/cci/chubb4242.pdf.
17 Id.
18 Id.
19 Id.
20 Id. See also Insurers in Drug Trial Rethink, Post
Magazine, Apr. 20, 2006, at 3.
21 See Goudsmit, supra note 16.
22 Sullivan Group, 2004 Human Clinical Trials Primer,
available at
http://www.sullivangroup.com/news/publications.
23 See Goudsmit, supra note 16.
24 Id. See also ACE INA, ACE USA Introduces Foreign
Clinical Trial Coverage to Respond to Growing Needs of U.S.Based Companies Conducting Clinical Trials Overseas,
available at http://www.aceina.com/shownews.asp?ID=366.
25 See Sullivan Group, supra note 22.
26 Chubb Liability Insurance Policy Form 80-02-2085 (on
file with author).
27 See Jill Wadlund, Heading Off a Clinical Trial Liability
Lawsuit, Applied Clinical Trials, Vol. 12, No. 4, Apr. 2003,
available at
http://www.chubb.com/businesses/cci/chubb1165.pdf.
28 21 C.F.R. § 50.27 (2006).
29 See Rosenthal, supra note 2. See also TeGenero Trial
Adverse Events Raise Safety, Consent Issues, Clinical Trials
Advisor, Apr. 20, 2006.
30 Ed Vinales, Gerling Vows to Continue with Drug Trial
Insurance, Post Magazine, May 4, 2006, at 1.
31 Id.
32 Insurers in Drug Trial Rethink, supra note 20.
33 Id.
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Vice Chair
Steve Hall
Vice Chair
Dan Pancamo
Section of Science & Technology Law
Officers:
Chair
Richard L. Field
Chair-Elect
William Sloan Coats
Vice-Chair
Gilbert F. Whittemore, Jr.
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Ruth Hill Bro
Budget Officer
Kimberly Kiefer Peretti
Section Delegates
to the House of Delegates
Ellen J. Flannery
Scott F. Partridge
Immediate Past Chair
Ivan K. Fong
Past Chair Liaison to Officers
Thomas J. Smedinghoff
©2006 American Bar Association. All
rights reserved. Editorial policy: Biotech
Briefing endeavors to provide information about
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and technology that is of professional interest to
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