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.

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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.

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“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.

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“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.

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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

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

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