2222222222

Life Sciences

Offshore Trial and Error

Clinical trials conducted abroad are a necessity in life sciences, but the complex risks must be carefully managed.
By: | December 14, 2016 • 6 min read

American life sciences companies conducting clinical trials abroad confront a tangle of risks that require careful planning, well-drafted documents and the aid of local organizations to navigate laws, regulations and customs of each test site, lest errors and oversights produce costly delays and faulty clinical data.

Advertisement




The biggest risk for overseas clinical trials, said Jim Walters, managing director, Aon Risk Solutions’ life sciences group, is “working through the myriad regulations,” both for insurance and clinical requirements, so “sponsors can meet local ethics committees and regulatory requirements to get the trial started.”

American companies’ efforts to grapple with compliance risk, said Jack Bodden, managing director, global risk management, Marsh, is complicated by different regulatory requirements in each country.

Compensation requirements for participants in clinical trials vary broadly between countries, he said, and the “ask” of sponsor companies from regions and clinical sites often differ from the country’s written regulations. “Not getting regulatory risk managed well can delay or halt the trial,” he said.

For example, the United States does not require clinical trial liability insurance coverage — the equivalent of product liability insurance for clinical trials. But as a practical matter, the ethics committees of the hospitals where trials take place would reject any trial that did not show evidence of the sponsor’s insurance, said Frank Goudsmit, senior vice president, life sciences and food market segments, Chubb.

Likewise, accident insurance for participants’ travel to and from the trial site has become customary in Germany, although it’s not required by statute, Goudsmit said.

Jack Bodden Managing director Global risk management Marsh

Jack Bodden
Managing director
Global risk management, Marsh

Until recently, said Bodden, several European Union countries required sponsors to provide evidence of insurance protection for its patient population that exceeded protections in commercially available products.

“Sponsors couldn’t comply because there wasn’t even an insurance option available to satisfy the requirement,” he said. Ultimately, pharmaceutical companies organized and negotiated a compromise with regulators that enabled their compliance while preserving the highest standards of patient safety and protection.

Local Partners

Even within a country, regional and local customs can vary, calling for experienced local partners to navigate variations in written and unwritten rules, said Dan Brettler, life science and technology co-practice leader, Conner Strong & Buckelew.

Individual clinical sites may look to expand requirements beyond clinical trials liability, he said, such as indemnification for professional liability, or they may require local admitted insurance even where the country permits nonadmitted cover.

How does a sponsor control its risk in environments where inconsistency is the only consistent factor?

“Dealing with experienced contractors and writing comprehensive contractual agreements is part of the liability equation,” Brettler said.

122016_03_riskreport_chart

“Sponsors must be mindful of insurance and indemnification contractual provisions with their CROs, clinical sites and supply chain partners, especially in countries with a history of product contaminations or regulatory violations.”

CROs, or contract research organizations, are local companies that sponsors hire to help manage development and implementation of their trials. CROs should know the local statutes, customs, ethics committees and decision-makers in the sites where a trial is proposed, said Walters.

CROs should also be vetted, said Dr. Rasika Birewar, owner, sehatINDIA Healthcare Services in Mumbai.

Advertisement




“The CRO shouldn’t escape risk assessment because it’s local to a country. Sponsors have to do their own due diligence on the CRO because the onus is on them to comply with regulations and laws in every site’s country.”

“The sponsor needs eyes and boots on ground in addition to the CRO,” said Rob Dickey, chief financial officer of Tyme Technologies Inc., which has conducted clinical trials in North America, Europe and India.

A manager in the direct employ of the sponsor should oversee the CRO, Dickey said. “If something falls off a table in the treatment room and hits a patient’s foot, who’s responsible?”

Medical care in that case, where the injury is unrelated to the investigational product, might be a standard part of coverage in their world, he said, but not necessarily in ours. “A lot of stuff can happen when you’re not there and there’s a seven-hour time difference. You need someone to oversee that.”

As in the case with rare diseases, sponsors sometimes conduct trials all over the world to accrue a statistically valid sampling of patients with a particular disease state, said Goudsmit. That could involve two or three patients in a dozen countries — and local representation in each of those.

Good Documents

A secondary risk, almost rivaling compliance, is appropriate documents that meet regulatory standards in the right hands well before the start of the trial, said Walters.

“Sponsors don’t want wrong language in the insurance documents to delay the trial,” said Dickey. “The ethics committee in a given hospital may not meet for another six months.”

Clinical trial liability insurance, which responds to bodily injury to patients arising from the trial, is near-standard in custom if not by statute. In an industry that quantifies risk assiduously and prices its coverage accordingly, Bodden said, “clinical trial liability insurance may cover drugs and devices that have not yet proven to be safe and effective.”

Drugs undergoing clinical trials aren’t always new; approved drugs may undergo new trials for treatment of a different disease state.

Dan Brettler Life science and technology co-practice leader Conner Strong & Buckelew

Dan Brettler
Life science and technology co-practice leader
Conner Strong & Buckelew

In addition to clinical trial liability coverage, all trials must include informed consent documents that provide prospective participants “adequate information to allow for an informed decision about participation in the clinical investigation,” according to the FDA.

The document must be written in language understandable by laypeople, describing the study’s purpose, duration, expectations of participants and any risks exposed in the animal trials that precede the human trials.

Many CROs buy errors and omissions (E&O) insurance to protect themselves against sponsors’ allegations of financial injury arising out of negligence.
That can easily run into millions of dollars if the trial has to be repeated, Goudsmit said.

“If the clinical data isn’t acceptable to the regulatory body because of mistakes in research — if the CRO didn’t follow good clinical practices — E&O insurance would cover the cost of re-conducting the trial,” Goudsmit said.
Clinical trials can account for two-thirds of the cost of developing a new drug, said Praveen Gupta, managing director, chief executive officer, Raheja QBE General Insurance Co. Ltd., in Mumbai.
A demonstration that an investigational drug or device meets its safety and efficacy targets is the litmus test for regulatory approval. Trials can fail to meet their endpoints — generally not insurable — if they can’t demonstrate sufficient efficacy.

If the product fails because of safety concerns that manifest themselves during the trial, participants may well have suffered bodily injury.

“If a product fails to meet the regulatory endpoint because of safety concerns,” Goudsmit said, “that can absolutely result in a human clinical trial liability claim.”
In that case, he said, patients’ attorneys will ask, what did the sponsor know about possible adverse events, or what should it have known? Was the informed consent document thorough? Was it understandable?

FDA Approval: Gold Standard

Sponsors conduct their clinical trials where they can find patients with their targeted disease state or a specific DNA pool; they may go offshore to find “treatment naïve” patients to produce unambiguous clinical data; but they universally seek their regulatory endpoint — proof of safety and efficacy — and they almost universally seek FDA approval.

Advertisement




FDA approval is the coveted gold standard of regulatory approval both because the U.S. market is the world’s most lucrative, offering the innovator company the greatest pricing flexibility, and because most countries will also grant approval if a product meets the FDA’s high standards, Goudsmit said.

The FDA, and most other regulatory bodies, will accept data from clinical studies conducted anywhere in the world, said Walters. “Sponsors just have to adhere to the approved protocols and follow good clinical practices.”

“Countries want to protect their populations from unproven drugs and devices,” said Bodden. “And pharmas will do everything possible to keep patients safe.”

Susannah Levine writes about health care, education and technology. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Manufacturing

More Robots Enter Into Manufacturing Industry

With more jobs utilizing technology advancements, manufacturing turns to cobots to help ease talent gaps.
By: | May 1, 2018 • 6 min read

The U.S. manufacturing industry is at a crossroads.

Faced with a shortfall of as many as two million workers between now and 2025, the sector needs to either reinvent itself by making it a more attractive career choice for college and high school graduates or face extinction. It also needs to shed its image as a dull, unfashionable place to work, where employees are stuck in dead-end repetitive jobs.

Advertisement




Added to that are the multiple risks caused by the increasing use of automation, sensors and collaborative robots (cobots) in the manufacturing process, including product defects and worker injuries. That’s not to mention the increased exposure to cyber attacks as manufacturers and their facilities become more globally interconnected through the use of smart technology.

If the industry wishes to continue to move forward at its current rapid pace, then manufacturers need to work with schools, governments and the community to provide educational outreach and apprenticeship programs. They must change the perception of the industry and attract new talent. They also need to understand and to mitigate the risks presented by the increased use of technology in the manufacturing process.

“Loss of knowledge due to movement of experienced workers, negative perception of the manufacturing industry and shortages of STEM (science, technology, engineering and math) and skilled production workers are driving the talent gap,” said Ben Dollar, principal, Deloitte Consulting.

“The risks associated with this are broad and span the entire value chain — [including]  limitations to innovation, product development, meeting production goals, developing suppliers, meeting customer demand and quality.”

The Talent Gap

Manufacturing companies are rapidly expanding. With too few skilled workers coming in to fill newly created positions, the talent gap is widening. That has been exacerbated by the gradual drain of knowledge and expertise as baby boomers retire and a decline in technical education programs in public high schools.

Ben Dollar, principal, Deloitte Consulting

“Most of the millennials want to work for an Amazon, Google or Yahoo, because they seem like fun places to work and there’s a real sense of community involvement,” said Dan Holden, manager of corporate risk and insurance, Daimler Trucks North America. “In contrast, the manufacturing industry represents the ‘old school’ where your father and grandfather used to work.

“But nothing could be further from the truth: We offer almost limitless opportunities in engineering and IT, working in fields such as electric cars and autonomous driving.”

To dispel this myth, Holden said Daimler’s Educational Outreach Program assists qualified organizations that support public high school educational programs in STEM, CTE (career technical education) and skilled trades’ career development.

It also runs weeklong technology schools in its manufacturing facilities to encourage students to consider manufacturing as a vocation, he said.

“It’s all essentially a way of introducing ourselves to the younger generation and to present them with an alternative and rewarding career choice,” he said. “It also gives us the opportunity to get across the message that just because we make heavy duty equipment doesn’t mean we can’t be a fun and educational place to work.”

Rise of the Cobot

Automation undoubtedly helps manufacturers increase output and improve efficiency by streamlining production lines. But it’s fraught with its own set of risks, including technical failure, a compromised manufacturing process or worse — shutting down entire assembly lines.

Advertisement




More technologically advanced machines also require more skilled workers to operate and maintain them. Their absence can in turn hinder the development of new manufacturing products and processes.

Christina Villena, vice president of risk solutions, The Hanover Insurance Group, said the main risk of using cobots is bodily injury to their human coworkers. These cobots are robots that share a physical workspace and interact with humans. To overcome the problem of potential injury, Villena said, cobots are placed in safety cages or use force-limited technology to prevent hazardous contact.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them.” — David Carlson, U.S. manufacturing and automobile practice leader, Marsh

“Technology must be in place to prevent cobots from exerting excessive force against a human or exposing them to hazardous tools or chemicals,” she said. “Traditional robots operate within a safety cage to prevent dangerous contact. Failure or absence of these guards has led to injuries and even fatalities.”

The increasing use of interconnected devices and the Cloud to control and collect data from industrial control systems can also leave manufacturers exposed to hacking, said David Carlson, Marsh’s U.S. manufacturing and automobile practice leader. Given the relatively new nature of cyber as a risk, however, he said coverage is still a gray area that must be assessed further.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them,” he said. “Therefore, companies need to think beyond the traditional risks, such as workers’ compensation and product liability.”

Another threat, said Bill Spiers, vice president, risk control consulting practice leader, Lockton Companies, is any malfunction of the software used to operate cobots. Then there is the machine not being able to cope with the increased workload when production is ramped up, he said.

“If your software goes wrong, it can stop the machine working or indeed the whole manufacturing process,” he said. “[Or] you might have a worker who is paid by how much they can produce in an hour who decides to turn up the dial, causing the machine to go into overdrive and malfunction.”

Potential Solutions

Spiers said risk managers need to produce a heatmap of their potential exposures in the workplace attached to the use of cobots in the manufacturing process, including safety and business interruption. This can also extend to cyber liability, he said.

“You need to understand the risk, if it’s controllable and, indeed, if it’s insurable,” he said. “By carrying out a full risk assessment, you can determine all of the relevant issues and prioritize them accordingly.”

By using collective learning to understand these issues, Joseph Mayo, president, JW Mayo Consulting, said companies can improve their safety and manufacturing processes.

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it.” — Joseph Mayo, president, JW Mayo Consulting

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it,” Mayo said. “They can also use detective controls to anticipate these issues and react accordingly by ensuring they have the appropriate controls and coverage in place to deal with them.”

Advertisement




Manufacturing risks today extend beyond traditional coverage, like workers’ compensation, property, equipment breakdown, automobile, general liability and business interruption, to new risks, such as cyber liability.

It’s key to use a specialized broker and carrier with extensive knowledge and experience of the industry’s unique risks.

Stacie Graham, senior vice president and general manager, Liberty Mutual’s national insurance central division, said there are five key steps companies need to take to protect themselves and their employees against these risks. They include teaching them how to use the equipment properly, maintaining the same high quality of product and having a back-up location, as well as having the right contractual insurance policy language in place and plugging any potential coverage gaps.

“Risk managers need to work closely with their broker and carrier to make sure that they have the right contractual controls in place,” she said. “Secondly, they need to carry out on-site visits to make sure that they have the right safety practices and to identify the potential claims that they need to mitigate against.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]