Increased liability coverage becomes important as public gets more protection
The South African medical industry has long been regarded as one of the most progressive industries in the world. In 1967, Dr Chris Barnard put South Africa on the world map when he successfully performed the world’s first human heart transplant. South Africa has also been at the forefront of the Aids epidemic, both as the country which has the highest infection rate in the world and the country where significant research is being put into developing medication to combat the epidemic.
This has set the scene for South Africa to be a perfect destination for international pharmaceutical companies to use South Africa as a perfect setting where clinical medicinal trials are undertaken. Factors such as gender and racial diversity are major drivers of this.
While this means that patients potentially have access to world class medication, it also means that hospitals and pharmaceutical companies open themselves up to the risk of significant liability should the medication not prove to be as effective as expected.
Become proactive with liability cover
A factor which is a significant contributor towards this is the fact that South Africa has one of the most progressive democracies in the world, which offers significant protection to its citizens. Specialist liability management company Camargue points out that this means that companies cannot afford to be complacent when it comes to medical liability coverage. Especially since medical schemes do not cover drug testing.
"Parties to the clinical trials have moral and legal obligations to protect the interests of the human participants. The type of liability exposure will differ depending upon the role played by each of these parties. Therefore, should a clinical trial fail, all these parties are vulnerable to liability risk,” says Camargue Underwriter Nkejane Mofokeng.
He adds that such risks may arise from inadequate disclosure, conflicts of interest, failure of good clinical practices or breaches of informed consent which may result in injury or death of volunteers. "Therefore, it is imperative that the parties involved in the procurement of a clinical study employ risk management strategies to reduce their exposures to loss.”
The threat is real, despite state of the art technology
There are concerns about how this can be allowed in today's day and age where technology has advanced so much that it should become almost impossible to design medication which would leave companies open to such liability. However, the threat is real.
In 2006, German medical research company TeGenero's TGN1412 drug for the treatment of leukaemia and autoimmune diseases left six previously healthy men with multiple organ failure during the first phase of a clinical trial.
Mofokeng points out, that "At first sight, one may lay responsibility at the feet of TeGenero, the manufacturer of the TGN1412 drug, however as in all clinical trials, there exists a web of liability that ensnares several parties involved in the trial.”
TeGenro was founded in 2000 as a spin-off of the Medical School of the University of Würzburg. But these events of 2006 changed the company completely. According to Wikipedia, TeGenero offered £5 000 to each of the victims of the TGN1412 trial disaster in turn for accepting a no-fault agreement. The deal was immediately rejected out of hand by the victims' lawyers. It was also revealed that TeGenero was only insured for £2 million for the TGN1412 drug trial, an amount which is virtually certain to be exceeded by the compensation claims of the victims.
This caused a chain of events which ultimately crippled the company, forcing it to file for insolvency.
Get the right cover to protect your needs
As indicated, medical malpractice liability suits can become costly, especially if the company designing and testing the drug is an established research company with a reputation for producing medication which have been successful.It is therefore necessary for companies to seek specific liability cover as general liability cover is not sufficient.
"It is important to note that a general liability insurance policy alone does not suffice for clinical trials, as the exposure to liability is far greater. The main liability exposures may include but are not limited to, medical malpractice, products liability, professional indemnity liability or director's and officer's liability. Given the wide scope of coverage, each clinical trial insurance policy has to be carefully underwritten, ensuring all exposures are taken into account and no gap in cover results occur,” says Mofokeng.
Because South Africa is one of the most progressive democracies in the world, government is on a mission to implement legislation which would bring it on par with similar legislation found in other parts of the world. Therefore, pharmaceutical companies need to tread carefully when entering the South African market.
"Recent regulation in South Africa stipulates that all clinical trial liability policies are to be written on a no-fault basis. This implies that, should a human volunteer become injured or die during the clinical trial, the volunteer does not need to prove fault on the part of the clinical research organisation - or other parties to the trial - in order to receive compensation for the harm suffered. The regulatory environment regarding clinical trials in South Africa has made it more difficult for pharmaceutical companies to carryout trials due to more stringent requirements and safety precautions, which has seen a substantial increase in cost,” says Mofokeng.
He adds that the phase III per-patient cost is approximately $48 000. The high per-patient cost further exacerbates the importance of clinical trials liability insurance, especially to provide a sense of comfort to investors as liability protection demonstrates prudent risk and financial management.
Editor's Thoughts:
This shows that legislation is empowering the public and is becoming a significant liability headache for companies. This will further increase as legislation will no doubt change when a new government is elected in May. Companies need to consider liability as an important aspect of risk management which is in itself becoming a major consideration for companies. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
