The exceptional pressure on the pharma sector to find a drug that ends the COVID-19 crisis has created a race to identify effective treatments under unprecedented circumstances, further increasing the traditionally high risk involved in such undertakings.
Drug development is a multistep process, usually requiring more than five years to ensure safety and efficacy of a new treatment, but several national regulatory agencies approved procedures to expedite clinical testing for COVID-19 drugs.
In addition, the pharma sector needs to fend off government interference. After US president Donald Trump insisted (opens a new window)that a vaccine would be available “within weeks”, the head of the US Food and Drug Administration (FDA) had to push back and risk a fresh conflict with the president during election campaign.
While a number of therapeutic drugs are currently undergoing testing and some are already helping to reduce mortality and the severity of symptoms, hopes are highest for the development of an infectious disease vaccine that can effectively protect the population and allow societies to return to normality.
There are around 40 potential COVID-19 vaccines currently being tested globally and more than 140 others in the early stages of testing, according to the World Health Organisation (opens a new window).
The development of a remedy against COVID-19 involves the participation of a number of different actors, and problems can occur in all stages of the process. A treatment may cause serious side effects, for example. It may also not work or may not be better than standard treatments. When nurses draw blood at a lab, an academic researcher handles a vaccine, a practitioner records participant-reported blood pressure measures, all these activities expose the company to different levels of risk.
In what is deemed to become the world’s first COVID-19 human challenge trial, healthy volunteers will be deliberately infected (opens a new window) with the virus this January in London, to assess the effectiveness of experimental vaccines.
The pandemic itself is adding more challenges. Due to the risk of contagion, more clinical trials are reverting to being conducted remotely. Whilst that alone increases the risk of missing data, data quality and oversight might be further impacted. There are also increased conduct issues and a generally heightened risk around compliance for all collected and reported data. More data may be released much quicker through “preprint” format but without going through the formal review programme, which may affect the quality.
Additionally, having processes conducted remotely increases the cyber risk. In July, the UK’s National Cyber Security Centre (NCSC) and its partners in the US and Canada have warned (opens a new window) over alleged Russian cyber actors targeting organisations involved in coronavirus vaccine development.
An arduous process
To be approved by the regulator, a drug needs to pass the pre-clinical phase as well as four other testing stages. In the pre-clinical phase, researchers need to prove that the drug can feasibly work and remove potential hazards that may prevent it from being tested on people. From a risk perspective, this exposes the company to product liability and general liability. Errors may occur both during the creation and the testing process, while the potential liability costs are likely be higher if a problem manifests itself at a later testing stage.
In general, the undertaking can affect several insurance classes. The exposures associated with clinical trials varies according to the testing phase but generally falls into four major categories: errors and omissions, medical professional liability, product liability, and general liability. Some medical expense coverage may also be required.
The testing stages
In phase I, the drug is tested among a small group of people to evaluate its safety, determine the appropriate dosage, and identify potential side effects. This is the first time the drug is tested on humans, exposing companies particularly to bodily injury risk in addition to products liability and medical malpractice liability.
In phase II, the drug or treatment is administered to a large group of people, usually a few hundred, to test its safety and effectiveness. Unsurprisingly, bodily injury exposure remains a major risk at this stage, combined with products liability and medical malpractice exposure during the clinical work. In addition, errors & omissions (E&O) risk increasingly comes to the fore as the trial turns larger and more complex. An error in record keeping can suffice to render the study partially or completely void, and repeating the exercise comes at considerable cost as new patients need to be recruited and staff paid, for example. E&O insurance does cover financial injury, if needed.
Following a successful phase II the drug or treatment is deemed as safe and can now be tested on a larger group of thousands of people in phase III. This is necessary to confirm its effectiveness, further explore potential side effects, and assess additional characteristics. The larger the test group, the greater the exposure to E&O risks. Nevertheless, the company continues to face risk from product liability and medical malpractice claims. Examples include alleged poor monitoring of patients undergoing electrocardiograms (EKGs) or blood work.
After the drug or treatment enters phase IV it can already be applied for specific purposes, despite the long term effects of the drug remaining unclear. Studies continue to collect information on risks, benefits, and optimal application. While medical malpractice risk is usually very low at this stage, the product liability exposure as well as the E&O risk remains high. Some side effects are only discovered years after they’ve entered phase IV.
Developing a single epidemic infectious disease vaccine from preclinical trials through to end of phase 2a usually costs between USD 31 to USD 68 million (USD14–159 million range), assuming no risk of failure, according to an article (opens a new window) in The Lancet.
From discovery to licensure a vaccine development can cost billions of dollars, take over 10 years to complete, and has an average 94% chance of failure, but because of the global sense of urgency, the development for a COVID-19 solution is being rushed through all development phases.
Insurance plays a major role
Clinical trial insurance provides a safeguard that an institution or sponsor is able to utilise to compensate those who are harmed whilst participating in trials.
To obtain cover for a clinical trial, it is critical that the sponsor or institution provides specific and detailed information to the insurer. This includes the relevant insurance proposal form with attaching information such as the protocol, participant information and consent form (PICF), Standard operating procedures (SOP’s) and the study trial register. The insurer will review this information and when accepted a ‘Contract of Insurance’ is arranged.
Healthcare providers and clinicians entering into contracts to provide clinical research services generally are not covered by their individual professional or medical indemnity insurance for exposures related to clinical trials, experimental procedures, and/or research-related activity. Contracted providers may therefore not have any insurance coverage for alleged errors they may make in administering their services within the trial or study.
Clinical trial amendments and deviations could change the scope of the protection required and therefore the coverage will need to be reviewed and accepted in order to ensure continuation of appropriate cover.
COVID-19 and the ongoing management of current clinical trials will require continuous review and implementation of contingency planning to address the potential impact of the pandemic, particularly around trial priority, participation and capacity.
The pandemic has definitely heightened consequences when it comes to conducting a trial. It is key to address the possible impact of and responses to COVID-19 by undertaking contingency planning and considering alternative models for conducting clinical trials. By engaging an insurance and risk broker, they can help in approaching the insurance market to obtain the right insurance for your level of risk whilst also helping you identify any risks that you may now be exposed to.
There has never been a more important time to invest in risk management to plan for your business to continue to survive during COVID-19 as well as renormalise post the COVID-19 crisis.