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.


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.


“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.


“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.


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

Employment Practices


Sexual harassment is a growing concern for corporate America. Risk managers can pave the way to top-down culture change.
By: | March 5, 2018 • 12 min read

The #MeToo and #TimesUp movements opened up Pandora’s Box, launching countless public scandals and accusations. The stories that continue to emerge paint an unflattering picture of corporate America and the culture of sexual harassment that has permeated it for decades.


“The clock has run out on sexual assault, harassment and inequality in the workplace. It’s time to do something about it,” reads the official tagline of Time’s Up, one of the most vocal groups demanding change.

The GoFundMe campaign that supports the Time’s Up Legal Defense Fund raised more than $16.7 million in less than a month, making it the most successful GoFundMe initiative on record.

Funds will be used to help victims of sexual harassment and assault bring legal action against harassers, as well as provide public relations consultation to manage any media attention such suits might attract.

The problem was never really a secret.

In surveys conducted since 1980 by the U.S. Merit Systems Protection Board, 40 percent of women and 15 percent of men consistently reported being sexually harassed at work.

In a sweeping meta-analysis of 25 years’ worth of research data, published in “Personnel Psychology,” an average of 25 percent of women reported experiencing sexual harassment at work. When respondents were given clear definitions of harassing behavior, that figure shot up to 60 percent.

The current climate is just now pushing awareness to the forefront. It was reported last November that law firms in the nation’s capital are seeing a spike in inquiries about sexual harassment cases.

Laura Coppola, regional head of commercial management liability in North America, Allianz Global Corporate & Specialty

In addition, the Equal Employment Opportunity Commission (EEOC) website is seeing visits to its harassment web page double.

There’s no question the costs to businesses can be staggering. Twenty-First Century Fox reportedly incurred $50 million in costs tied to the settlement of sexual harassment and discrimination allegations in its Fox News division, as well as a $90 million settlement of shareholder claims arising from sexual harassment scandals.

In June, the company disclosed in a regulatory filing that it had $224 million in costs during the fiscal year related to “management and employee transitions and restructuring” at business units, including the group that houses Fox News.

If time is indeed up, it won’t just impact Hollywood, Silicon Valley or Capitol Hill. It will impact every workplace, in every industry.

“It affects everybody,” said Marie-France Gelot, senior vice president and insurance & claims counsel for Lockton’s Northeast Claims Advisory Group.

“I think anybody in corporate America — at some point — has seen it or been aware of it or been around it.”

“This particular phenomenon is certainly at a much wider scope than we’ve seen in the last decade or so,” said Laura Coppola, regional head of commercial management liability in North America, Allianz Global Corporate & Specialty.

“This is going to touch many industries, many segments, and many people.”

Employers are beginning to wonder if their workplace could be next.

“I think if you’d been asking [insureds] a year ago, ‘Are you interested in hearing about sexual harassment prevention?’ I think the answer would have been, ‘No, we’re good, we’ve got it,’ ” said Bob Graham, vice president, HUB International Limited.

“But I think now everyone’s saying ‘Sure, yes, we’d like to hear something.’ ”

Leading the Conversation

As American workplaces come under increasing scrutiny, the time is ripe for a large-scale pivot in the way employers manage risks related to sexual harassment.

The co-chairs of the EEOC’s select task force on the study of harassment in the workplace expressed it aptly in 2016:

“With legal liability long ago established, with reputational harm from harassment well known, with an entire cottage industry of workplace compliance and training adopted and encouraged for 30 years, why does so much harassment persist and take place in so many of our workplaces? And, most important of all, what can be done to prevent it? After 30 years — is there something we’ve been missing?”

Experts in the management liability field unanimously told Risk & Insurance® these issues should be elevated to the board level and the C-suite.

“Just as cyber liability shifted rapidly from an IT discussion to a board level discussion, so too will the harassment and discrimination discussion go beyond HR and be elevated to the highest levels,” said Coppola. It will become a corporate-wide, enterprise-wide conversation.

“It’s going to take some time to get to that board level, but it’s going to have to happen,” said Paul King, national practice leader, management and professional services, USI Insurance Services.

“Risk management and HR cannot go down parallel paths, not understanding one another. Not anymore. There’s too much at stake.” — Paul King, national practice leader, management and professional services, USI Insurance Services

Risk managers, said Kelly Thoerig, U.S. employment practices liability coverage leader, Marsh, are well suited to lead this conversation, which means actively partnering with human resources, the legal department, the general counsel’s office and outside counsel.


“Just like the quarterback depends on the offensive line, on receivers, on the running backs, it’s not a one-man show,” said King. “This can’t be the risk manager operating in a vacuum; they have to be liaising with multiple parts of the organization.”

Added King, “Risk management and HR cannot go down parallel paths, not understanding one another. Not anymore. There’s too much at stake.”

Connecting with outside counsel can also be of great benefit to risk managers, said Coppola.

“[They can] provide a very independent objective view of what they see in the overall market and how their knowledge of the individual client’s best practices can be improved and enhanced to ensure that they are protecting employees and the organization.”

Brokers and carriers also may be able to offer insights and services. Unfortunately, that piece is often lost because risk management and HR are siloed.

“The [knowledge of the] services that come with the insurance policy end up with the policy — in a drawer in the risk manager’s office,” said Tom Hams, employment practice liability insurance leader, Aon.

“HR doesn’t know that they exist. Even if they’re just online blogs or something like that, they could be more meaningful to the HR department than they are to risk management.

“So it’s important to make sure that companies are aware they’ve got those tools and — more importantly — to share them internally.”

Expediting Cultural Change

The X factor that underpins every aspect of these efforts is culture, experts agreed.

“It’s not so much ‘does the company have best-in-class policies and procedures in place;’ I think many of them do. I think that a significant change needed is doing a full overhaul of corporate culture, and that’s no small feat,” said Gelot.

Paul King, national practice leader, management and professional services, USI Insurance Services

True culture change can only come from the top level. But that isn’t likely to happen unless everyone at the top understands what the scope of the exposure could be if it’s not addressed appropriately on the front end. And for that, money talks, said Thoerig, who will be presenting on the topic at RIMS 2018 in San Antonio.

“Nothing is more instructive than real tangible claims examples and settlement amounts. Arm yourself with … recent, relevant claims examples specific to the industry and the jurisdictions the company operates in.”

In addition, said King, HR and legal should be regularly feeding claims information to risk managers to share at quarterly meetings of the board and give specific updates around these issues.

Armed with that level of intelligence, top brass can set the goals that will drive all anti-harassment efforts, said experts, putting an emphasis on identifying and correcting behavior that could potentially expose a company to liability.

Better Training and Reporting 

The best anti-harassment programs are multilayered, said Hams, with each facet carefully tailored to suit the employee population, the industry and the organization’s goals. A clearly defined policy is essential, stating that harassment will not be tolerated and neither will retaliation against those who report it.

The policy should be clear that employees are expected to report harassment or unacceptable behavior. Hams said he’s seen companies go so far as to state employees who don’t speak up are in violation of the policy.

“At least it should give them pause to stop and think about what they might have seen before they click the button or sign the document,” he said.

Companies should consider how uncomfortable employees may be about speaking up. An open-door policy is a start.

But there should also be multiple reporting points throughout the organization, said Hams, and an anonymous hotline for those reluctant to bring the matter up with anyone in their chain of command, and a multilingual hotline as well.

An effective training plan will have multiple moving parts and should touch every level of the organization from the executive suite to managers and supervisors to the rank and file. Comprehensive training is especially critical for the managers and supervisors who might receive or investigate complaints.

Many large employers already have training programs that can be considered best-in-class. Small to midsized employers, however, may still be using the cookie-cutter compliance-centric training that has dominated the field for decades.

The goal of this training is to hit all the bases related to Title VII of the Civil Rights Act, ticking off a list of acts or speech that would be considered illegal and affirming the company will not tolerate illegal behavior.

Overwhelmingly though, this type of training misses the mark. Studies have shown that this one-size-fits-all training is ineffective, especially when it’s a rote check-the-box exercise. Employees get the message their employer doesn’t take the subject too seriously.

Worse, it can even aggravate tensions, creating more discriminatory behavior from men who avoid working with women just to eliminate the chance of being accused of anything.

One study even found that men were more likely to place blame on the victim of sexual abuse after they’d received that type of anti-harassment training.

Even at best, compliance-centric training will still fail, because it only addresses behaviors that violate the law. But there is a broad array of behavior that — while not quite illegal — shouldn’t be tolerated.

When this kind of activity is allowed to flourish unchecked, the environment becomes increasingly toxic for those on the receiving end. It also tells employees that the company will tolerate harassment as long as it’s not overly egregious. In that case, it’s just a matter of time before the company is faced with a serious claim.

“Nothing is more instructive than real tangible claims examples and settlement amounts. Arm yourself with … recent, relevant claims examples specific to the industry and the jurisdictions the company operates in.” — Kelly Thoerig, U.S. employment practices liability coverage leader, Marsh

In its 2016 report, the EEOC’s harassment task force recommended changing tactics, exploring alternative training models such as respect-based civility training — what some call professionalism training.


The theory is “if you train them to act in a professional manner, these things tend not to happen at all,” said Hams.

The EEOC also suggested bystander intervention training, which is designed to empower employees to intervene when they witness harassing behavior.

Experts agreed whatever training programs or modules a company chooses, it’s important the training material reflect the workforce and be continuous and regularly refreshed.

A certification scheme also should be put in place to ensure the training is hitting the mark. While the law does not yet require companies to prove the effectiveness of their programs, some suggest it’s only a matter of time before the courts catch up to the problem.

What’s more, said Coppola, it’s simply the right thing to do for companies that want to confirm they’ve created a culture where all employees can expect to be treated professionally.

Zero Tolerance

Gelot and others believe a zero-tolerance policy should be a key component of an effective anti-harassment program.

“There are many companies that have Harvey Weinsteins and Matt Lauers and Kevin Spaceys working in their midst and those people are tolerated. Employees know about them — it’s not a secret.”

Bob Graham, vice president, HUB International Limited

Particularly when the harasser is a high-level executive, companies may wrestle with the decision to look the other way or lose a key rainmaker. In a zero-tolerance environment — one that starts at the top — the decision would be clear.

“What we saw with Matt Lauer and Charlie Rose — they were terminated immediately as the accusations came out. That’s zero tolerance. That’s sending a message to all of the employees within the company that this is completely unacceptable, we won’t tolerate it, and [it] clearly sends a message to the public at large.”

Employers should promote a workplace culture where all forms of harassment and discrimination are unacceptable and reportable, said Gelot. That’s the only way to take the fear and the stigma out of reporting.

That said, the EEOC offers a word of caution on zero-tolerance policies applied militantly without regard for common sense. Employers should hash out the specifics of which acts merit immediate termination versus a warning.

Overzealous application of the zero-tolerance doctrine can backfire if an employee fears her coworker’s children will go hungry if she reports his lewd or sexist jokes.

Creating a Dialogue

As with managing any other exposure that touches everyone, robust sharing of ideas and best practices has the power to improve the risk profile of entire industry sectors.

Facebook raised eyebrows in December, making public its sexual harassment policy in full.

“I hope in sharing it we will start a discussion, both to help smaller companies thinking about this for the first time, and to improve our own practices by learning from other companies,” wrote Lori Goler, Facebook’s global VP of people, about the company’s bold move.


That level of disclosure is making some risk professionals uncomfortable. But others acknowledge the wisdom of it.

“Any time you can share best practices that’s probably a great idea, because no one has all the answers … or at least not all the right answers,” said Graham.

“There’s a reason they did that, and I think it’s for all the right, positive reasons. They want to drive the momentum that is going to reduce or even eliminate what we have seen in corporate America over the last 50-plus years. They want to lead by example, they want to be the model and rightly so,” added Coppola.

“I think we are at a perfect time in our economic environment that allows the evolution of equality in our workplace.”

Part of that should involve making the workplace more egalitarian, said Gelot, and figuring out “how to make female employees not feel ostracized by a ‘boys’ club’ atmosphere, and actively championing the ascension of women into senior rolls.”

“We can’t focus on the past,” said Coppola. “But we can work very hard collectively as a community, and within the insurance industry specifically, to move forward.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]