What You Need to Know about Insuring Your Clinical Trials

Since 1956, RJ Ahmann Company has served businesses nationwide. RJA is a premier provider of clinical trial insurance.

Do you conduct domestic or international clinical trials?

Are you researching a product in a preclinical trial phase or preparing for 510(k) approval?

If so, you have complex needs that require an insurance agency that specializes in clinical trial insurance. It’s important to plan ahead. If you’re planning a clinical trial, you should secure coverage at least four to six months in advance. Many clinical trial companies mistakenly believe that they’ve protected themselves from liability with Informed Consent forms. Not so. You can still be sued and found negligent even with signed Informed Consent forms in place. Those seeking 510(k) approvals may believe that because the approval process is quicker, the risk is lower. Also this is not the case. Below you’ll find information about how to secure insurance protection for your upcoming clinical trial or 510(k) product.

Types of companies that need specialized clinical trials insurance include:

  • Research companies
  • Clinical trial service companies, including clinical trial facilitators
  • Medical device manufacturers
  • Pharmaceutical manufacturers
  • Biotechnology researchers and developers
  • Contract research organizations

Recent drug disasters, the push for rapid drug development, increased governmental regulation, the litigious environment and global business are all reasons that prudent clinical trial companies secure expert insurance partners.

Clinical trial insurance considerations:

When your research is ready for the clinical trial phase, even if you are planning to obtain 510(k) approval, having the precise mix of insurance coverage is vital. Trial insurance is often a required component in the approval process.

When injuries occur during clinical trials, adverse results may include medical payment expenses, public and regulatory scrutiny, personal injury and E&O lawsuits, and even criminal indictments. All of these are in addition to damaged reputations, difficulty in recruiting for future trials, interruption of the trial itself, delays in product launch, increased insurance rates and/or difficulty obtaining coverage.

Clinical trial lawsuits or claims can result from a variety of allegations:

  • Failure to perform as per the contract
  • Failure of proper monitoring
  • Failure to report negative information
  • Deviations from protocols
  • Failure to provide adequate information

Having adequate and properly executed coverage will protect not only the sponsor, but also investors, investigators and other parties involved in the management of the trial. Improve your ability to move forward with your trial approval on a timely basis by working with an expert now.

International exposures

There are many reasons to extend trials to other countries. Prior to trial approval, in many cases, the insurance company must be approved by the regulators in the country where the trial will take place. These issues require an agency and insurer with a global network and life science specialization.

Information needed to begin the insurance process:

  • Protocol of the trial
  • Patient information, the number of patients involved in the trial, age, health requirements, etc.
  • Informed Consent, including local language consent forms for each country where trial is operated
  • Addresses of all investigator sites
  • Proposal forms for some countries, such as USA, Germany and Poland

Exposures that require specialized solutions:

  • Clinical trials for phase I, II and III products, including global insurance and local certification in accordance with the laws of the country where clinical trials take place (Applies to sponsors, monitors, clinical investigators and investigational review boards)
  • Research animals and their corresponding historical data
  • Product liability for 510(k) research trials and product launch
  • Clean room contamination
  • Precision instrument replacement
  • Loss of grants, endowments and other financial contributions
  • Bio contamination
  • Spoilage
  • Loss of medical and biotechnology research records, including cost to recover
  • Intellectual capital infringement, including patent, copyright and trademark rights, along with the cost for defending intellectual capital or responding to a third party complaint against your company
  • Inadvertent disclosure of private and confidential information whether stored electronically, in a file cabinet or while being shipped to another location
  • Transit exposures, including calibration, spoilage, inland and ocean

In many cases, the following insurance is needed:

  • General liability: This coverage is critical anytime you have a product or service that can result in bodily injury or property damage. Even if you are providing a 510(k) product or a service connected with the promotion or research of a product, you have exposure to a lawsuit. In fact, some jurisdictions throughout the world consider the manufacturer of a product or provider of a service to be an equal party to a claim where the cause of injury was doctor error.
  • Latent injury liability: In many cases, bodily injury is not discovered until years after it is applied, implanted or used by a patient. Historically, a multitude of devices and drugs have either malfunctioned or resulted in birth defects and other serious injuries. When cases reach class action status, the settlement amounts can be staggering. This is true even with Informed Consent forms properly signed by patients entering clinical trials. If bodily injury results, properly written liability protection can protect you and your investors.
  • Incidental medical malpractice liability: Doctors and nurses on your corporate staff could be named in a medical malpractice lawsuit. If so, they may not have liability protection unless they are specifically included as part of your overall liability insurance program.
  • Errors and omissions liability: This exposure is often overlooked by clinical trial companies, yet the potential for a loss is great. Errors and omissions coverage protects you if you make an error or omission that causes a financial loss to another business. It also protects you if you are sued for loss of revenue and extra expense suffered by another company.
  • Product recall: A product recall can hugely impact on your bottom line and create additional liability. Managing this risk and determining if a transfer through insurance is recommended can only be determined by an agent who specializes in the life science industry.
  • Workers’ compensation: Every business faces the risk of employee injury, but in life sciences, the risk of occupational disease is of particular concern. Employees may be exposed to chemicals, pathogens and viruses. In addition, employees often experience repetitive motion injuries, such as carpel tunnel, from working with tiny products and precise instrumentation.
  • Directors and officers: If you have a board of directors or investors, a solid D&O policy will protect their personal assets if they are sued for the decisions they’ve made on behalf of the company.
  • International exposures: If you conduct trials, or if you manufacture or service your product in a foreign country, you are subject to each country’s insurance rules and regulations. Liability exposures and legal environments vary from country to country. Tax implications can be costly if a program is not structured properly.
  • Property coverage: Like all businesses, life science businesses need property insurance to protect buildings and equipment. However, damage to customized equipment can result in a more costly business interruption period.
  • Business interruption: When property damage occurs, business interruption typically ensues. Losing access to your clean room, use of critical technology or other medical equipment can cost millions. Loss of highly educated employees can result in a long downtime due to the difficulty of replacing key scientists and other uniquely skilled staff.

A smart solution

Clinical trials followed by product launch exposures require a specialized agent and a specialized mix of coverage. If you need insurance for your life science company, or if you just want to learn more, RJ Ahmann can help. Based in Minneapolis, Minnesota, our specialized team helps companies grow and prosper with clinical trial insurance protection.

Our highly trained and experienced staff negotiates customized coverage extensions with financially sound life science insurance providers. Furthermore, we offer global capabilities to provide your clinical trial company with worldwide coverage and claims handling.

Why RJ Ahmann Company?

  • We specialize in insurance and risk management for the life sciences industry, and provide in-depth analysis of your risks. In fact, 98 percent of our clients renew with us each year.
  • Our team of skilled insurance experts will provide the highest level of expertise available when reviewing your exposures, contracts, policies and programs. We can then develop a tailored insurance program that will provide protection for your unique needs.
  • LifeScience Alley, a Minnesota-based trade organization and a premier voice in the medical and life science industry, selected RJ Ahmann as their preferred insurance provider.
  • We offer collective expertise and unparalleled international clout as the only agent in Minnesota who is an invited member of TechAssure – an international network of agencies that specialize in the life science and technology industry.
  • Our partnership with WING allows us to expand our global service to every corner of the globe.
  • We enjoy preferred access to all major life science/technology insurance carriers, creating competitive insurance pricing and coverage. We also develop unique program offerings with key insurers.
  • We provide easy access to risk management and insurance tools, disaster assistance and ongoing guidance in cost-effective insurance and risk management programs.
  • Because of our expertise, focus and skill in insuring technology companies as well as life science companies, we have been the endorsed provider for Minnesota High Tech Association for more than 15 years.

Ready to learn more? RJ Ahmann is ready to help with solutions for life science businesses.