Updated: Dec 12, 2018
Liability and indemnity both are very critical elements of clinical research process and often misunderstood. A clear understanding of liability and indemnity are very important in order to have proper risk management measures in place for clinical trials.
Indemnity means a legally binding promise by which one party undertakes to accept the risk of loss or damage of another party that may suffer from the loss or damage. In simpler terms, Indemnity is a contractual arrangement whereby parties agree to provide compensation for any losses suffered by another party. Indemnity specifies that the insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss. Indemnity is one of the risk management measures for clinical trials. The purpose of an indemnity arrangement is to provide legal protection for the participants in the event of an unforeseen adverse circumstance arising during the course of a clinical trial. Protocol violation, malpractice and negligence by investigators and study site personnel are not covered under indemnity for sponsored clinical trials. There are 3 major indemnity elements:
a) Triggering events-In what circumstances will an indemnity become effective
b) Excluded events-In what circumstances will an indemnity will not be effective
c) Liabilities covered-What kinds of liabilities will be covered
Insurance - means a form of indemnity provided by an insurer under which the insurer agrees to indemnify the party purchasing the insurance policy in respect of certain specified losses and liabilities upon the occurrence of certain specified events. Types of insurance that are relevant for the conduct of clinical trials include: professional indemnity, medical indemnity, public liability and products liability
Prior to 2004, information regarding indemnity insurance had to be specified in the application to the Bioethics Committee. Under the 2004 Act, however, every clinical trial must have liability insurance that identifies who would be responsible for any "harm" arising from the conduct of the trial.
Liabilities- Clinical Trial Liability Insurance (CTLI) basically covers legal liability arising out of lack of care, negligence resulting in injury or death of the subject. The sponsor of a clinical trial has the overall responsibility for the conduct of the trial and usually initiates, organizes and supports the clinical trial. Sponsor-related liabilities means claims made by or on behalf of clinical trial participants for personal injury that occurs as a result of their participation in the clinical trial. These injuries may be due to:
a) negligence in the design of the trial protocol, which may give rise to professional liability; or
b) the unintended, harmful effect of a product under investigation, which may give rise to products liability.
The type of Liability insurance can be classified as:
General liability insurance which covers an insured legal liability when they are found to be legally responsible for damage or loss suffered by a third party. General liability insurance includes public liability, product liability, professional indemnity and medical indemnity insurance. In the context of clinical trials, general liability insurance will protect the insured against claims made by research participants for personal injury caused by a negligent act or omission of the insured. Professional indemnity insurance means a type of insurance that protects a professional service provider against claims for negligence and breach of duty. Public liability insurance means a type of insurance that protects an insured against claims resulting from accidents or injuries that occur as a result of the insured's business activities and against claims resulting from accidental damage to property owned by someone else. No fault insurance is a type of insurance where the entitlement to compensation is not linked to the ability to prove that a personâ€™s injuries were due to the fault of another. A no fault insurance policy responds to a claim for compensation, regardless of whether it can be proven that there has been any fault or negligence by either party. Typically, the terms of such insurance policy will set out conditions under which compensation will be payable.
Requirement of Indemnity and Insurance in Clinical Trials: There are essentially two aspects regarding indemnity and insurance from the perspective of an entity that conducts clinical trials:
1. The first concerns the indemnity and insurance arrangements taken out (either on its own or on its behalf) by an entity that conducts or participates in the conduct of a clinical trial to protect that entity against liabilities that may arise in relation to a clinical trial. For e.g. In the public sector, each State and Territory jurisdiction provides indemnity or insurance coverage to its respective public health services in relation to their clinical trial activities.
2. The indemnity and insurance requirements imposed by a party conducting a clinical trial upon another party that is involved in that clinical trial in some capacity for example, as a sponsor, collaborator or contributor. The most common requirements are for the other party to provide a (contractual) indemnity to the first party and evidence of its insurance arrangements. The effect of such requirements is twofold:
the indemnity given by the other party protects the first party against certain liabilities; and
as the other party will have insurance covering its activities, the first party will be reasonably assured that the other party should be able to meet a liability that arises from its (negligent) conduct. (Indeed, if there is a requirement for the first party to be included as an insured on the other party insurance arrangements, then the first party will have a direct right to seek protection against the insurer).
Current scenario of Liability and Indemnity in India and other Countries
India: Clinical Trial Insurance covers the legal liability that arises out of lack of care, and negligence resulting in injury or death of the subject. The different types of Policies available for Clinical trials in India are mentioned in the table: No Fault Compensation PolicyThe Clinical trials insurance policy is based on a no-fault principle which is intended to provide compensation to clinical trial subjects, without proof of fault of the insured, in the event of their suffering an injury which is directly attributable to their involvement in the trial.Claims -made policyThe most commonly accepted form of insurance available for most types of products in human clinical trials is that which is written on a claims made basis, as opposed to being written on an occurrence basis. A claims-made form provides coverage only if the claim is filed during the policy period. As long as the claim is registered within the agreed-upon coverage dates, the insurance carrier is responsible; if, however, the claim is filed at any time after the coverage period even if the accident occurred during that coverage period, the insurer is not responsible.Premium Rating Policy For the purpose of premium rating, the most important aspect that is looked into is the track record of the sponsoring company and others involved in conducting the trial. The company must establish and maintain a policy of adherence to the required clinical trials protocol and must not stray from safety norms. Fulfillment of informed consent rules must be ensured. The rates of premium are dependent on the type & phase of trial, the drug being tested, the number of trial subjects, age of the subjects and the outcome of the trial.
Limits of Coverage
There is no set rule for establishing coverage limits or minimums, but the consensus in the insurance community is that a clinical trials liability policy should carry a minimum limit of $1 million and can have upper limits of $10 million through $20 million or more. Of course, a company's specific needs and sometimes the needs of the testing facility and its risk levels will dictate an acceptable range for these limits. The Policy also provides various extensions like Professional Indemnity extension and Manslaughter Defense cost for the Ethics Committee. Clinical trial insurance products are now available in India and are being provided by several general insurers.
Australia: The insurance products that are available in relation to clinical trials fall into two broad categories: liability insurance and no fault insurance. Commercial insurers offer the following types of insurance policies in each of these categories:
1) A blanket insurance policy covering all clinical trials conducted by an insured during a specified period; the period is often one year.
2) An insurance policy that is specific to, or covers only, a particular clinical trial. This type of policy is purchased on a trial by trial basis.
a) General liability insurance: General liability insurance covers an insureds legal liability when they are found to be legally responsible for damage or loss suffered by a third party.
b) No fault insurance: No fault insurance is a type of insurance where the entitlement to compensation is not linked to the ability to prove that a person's injuries were due to the fault of another.
Japan: The major types of insurance that pharmaceutical companies in Japan currently buy are-Comprehensive Liability Insurance and Healthy Subject Compensation Insurance. The first is comprehensive liability insurance, which is bought by foreign pharmaceutical companies and some major Japanese pharmaceutical companies. This provides adequate coverage for clinical trials in addition to product liability for over-the-counter drugs and things such as insurance against fire at plants. The second type is healthy subject compensation insurance, which is insurance for clinical trials conducted on healthy people. It provides relief up to after effects impediment grade 14 in addition to death.
Europe: The two types of insurance policies followed by different states of Europe are Compulsory Insurance and Non-compulsory Insurance. Compulsory Insurance is a form of insurance that is required by law before involvement into any kind of activities by individuals or businesses. Non Compulsory insurance as the name itself suggest is an insurance that is not required by law and hence is not compulsory.
Over half of the EU Member States require compulsory Clinical Trials insurance and the majority of these outline specific terms and conditions of the policy which must be in place. The terms being specified can relate to a limit per volunteer/patient, overall policy limits, run-off periods, plus other specifics. However these terms vary widely between countries. For example, Greece requires a limit of insurance of 200,000 Euros per patient while Germany requires 500,000 Euros per patient with a maximum limit of 5-15 million Euros per trial depending on the number of participants in a trial.
Germany and Greece follows Compulsory Insurance which is intended to safeguard the welfare of everyone concerned; including those who carry the insurance as they usually avoid expensive and time-consuming legal costs this way while UK follows Non compulsory type of Insurance.
U.S.A.: Generally, the type of insurance policy available in the U.S.A. is No-fault insurance policy. However for vaccine trials USA has a separate compensation programme known as NVICP Programme.
NVICP Programme: National Vaccine Injury Compensation Program (NVICP) is a type of no-fault compensation programme meant for supply and manufacture of vaccines in clinical trials. Today, this no-fault compensation program is funded by 75 percent surtax on each vaccine. Â It is thus a federal no-fault compensation program that covers medical costs, attorney fees, lost wages, and claims for pain and suffering. Awards typically consist of an initial lump sum plus a lifetime annuity.
The types of insurance providers available in India and different countries are listed in table below:
Table: Indemnity and insurance providers and arrangements in different countries
|Countries||Insurance Service Providers|
|Australia||ACTIA (Australian Capital Territory Insurance Authority), Treasury Managed Fund (TMF), a self insurance scheme of the NSW Government, The Northern Territory (NT) Government has in place a self insurance program that covers the risks of the Territory’s agencies, VictorianManaged Insurance Authority (VMIA), etc|
|India||Bajaj Allianz, United India Insurance, ICICI-Lombard, Tata-AIG, Bharti AXA General, etc.|
|Europe||Jardine Lloyd Thompson Limited (JLT), HDI-Gerling|
Clinical Research Newsletter
FHA Placement Blog
All existing and old students and training participants are requested to write to our Corporate Resources division on email@example.com along with your updated resume mentioning their Enrollment No. for registration with our Placement Cell asap, if not registered yet.
Placement testimonials: Our alumni are working with Fortune 500 and global Pharmaceutical, Food and healthcare giants like :