Drug shortages could be costly for clinical trials
A recent New York Times article highlighted the fact that there are “critical shortages of drugs to treat a number of life-threatening illnesses, including bacterial infection and several forms of cancer” and that “clinical trials for some experimental cures have been delayed”.
Unfortunately, this type of delay or interruption may not fall within the scope of a sponsor’s insurance coverage. The reason is that traditional business interruption coverage is triggered only when the interruption is caused by direct physical loss or damage to a sponsor’s facility, i.e., their lab, office or manufacturing location. Another coverage that may come into play is “contingent business interruption”. Also triggered by direct physical loss or damage, this type of insurance applies to supplier locations, e.g., a third party manufacturer or processor of the study drug. Finally, there are some new products available, like EPIC offered by Jardine Lloyd Thompson, which provides coverages for interruptions caused by other events such as regulatory shut down of manufacturing facility, insolvency of a manufacturer or processor and intellectual property claims.
If you would like to discuss this issue in more detail, please contact the WGA Life Sciences team.
About the Author
Michael Kearney is an Executive Vice President at WGA and co-leader of the Life Sciences Practice in WGA’s Property and Casualty Group . He specializes in working with life sciences and high technology companies, with a new emphasis on green companies, such as biofuel manufactures and clean technology.