Underwriting Considerations During the COVID-19 Crisis - Will the Rules for Clinical Trials be Relaxed?

April 09, 2020| Von Alexander Eistert | General Liability | English | Chinese

The latest figures on the COVID-19 pandemic make for alarming reading. At the time of writing, 1,484,811 people around the world were infected with the virus and 88,537 people have died.1 No other topic is dominating the headlines quite like the coronavirus, and images from Italy, Spain and other hard-hit countries are now omnipresent.

The biggest problem with COVID-19 is that there are currently no drugs to treat it, nor does a recognised, approved vaccine to prevent it exist. Pharmaceutical and biotech companies across the world are in a research race to identify effective treatments, each of them striving to be the first to make the decisive breakthrough.2

A worldwide research race

The World Health Organisation (WHO) lists 54 clinical studies that are currently focused on researching a vaccine.3 This list does not include initiatives also being undertaken privately around the world. Clinical studies are underway in a number of countries - including Germany, Israel, China, Switzerland and the U.S. - with many different approaches being employed.

Time is of the essence when it comes to combating this pandemic. Johnson & Johnson has announced that it will start clinical trials in September,4 while biopharmaceutical company CureVac hopes to start such tests early in the summer.5 Despite this optimism, it remains unlikely that a vaccine will be available before the end of 2020. This is primarily due to the tight regulations that apply to clinical trials. First and foremost, the effectiveness and safety of any potential vaccine must be verified, but there are also ethical questions to discuss and take into consideration before any approval can be granted.

Risks for participants

Clinical trials comprise various phases that build on one another. The main purpose of the first phase is to test the tolerability and safety of the drug and, depending on country-specific regulations, up to 100 people can participate. In phase two, the researchers attempt to determine the right therapeutic dose and test the overall treatment concept, with up to 300 people able to take part. Once the first two phases are complete, the company can market the treatment and compile evidence of its efficacy during the third phase. Any additional studies carried out when the treatment is market-ready are mostly for marketing purposes.

With regard to participant insurance, the biggest problems are generally encountered during phase one. Potential losses are at their highest in this phase as its when intolerances and severe side-effects are most likely to be experienced. Therefore, the conditions by which such a study can be insured must be examined very carefully within the risk management framework. Exposure decreases accordingly in phases two and three, with less volatility reflected in the loss experience. The number of participants must nevertheless be monitored closely, particularly in phase three.

Risk implications when relaxing regulations for clinical trials

At this point in time it’s difficult to judge conclusively whether the regulations that apply to clinical trials will be relaxed in light of the COVID-19 crisis. There is certainly a shared interest in finding an effective treatment without delay, but the risks must be weighed cautiously.

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In the U.S., for example, some initial steps toward relaxing the regulations have been made apparent. The FDA has approved the immediate (limited) use of an established malaria treatment (chloroquine) to treat COVID-19 and is fast-tracking similar medications that could also potentially be effective.6 In order to provide clarity on questions of liability, on 4 February 2020 the Department of Health and Human Services (HHS) issued a declaration under the Public Readiness and Emergency Preparedness Act (PREP) largely exempting from liability entities involved in the creation and distribution of countermeasures against COVID-19.

While the sole purpose of the declaration is to foster the swift development of medications and medical devices to prevent and treat COVID-19,7 testing the tolerability and safety of any medication remains the highest priority. For this reason, and the fact that only two of the 54 WHO-listed studies is currently in phase one (the others are in the pre-trial phase), an effective treatment cannot realistically be expected in the next few months.

Similarly, from a regulatory and political point of view, it shouldn’t be assumed that the rules governing clinical trials will be relaxed sufficiently enough to truly fast-track a vaccine. The fear of incidental risks that could arise is simply too great. While losses during clinical phases tend to be rare, they can also be severe.

For example, a clinical study in France in early 2017 led to the death of one participant and the hospitalisation of five others due to severe health complications. The incident happened in an accredited private institution, during phase one of the trial.

Another notable incident occurred in the UK in 2006 when six participants were seriously injured during phase one of a clinical study. They were injected with a dose of antibodies which caused them to suffer an extreme immune response.

Underwriting clinical trials

Examples like these show that the risks involved in clinical trials should not be underestimated. As such, risk-appropriate and careful underwriting is vital. The initial risk assessment should include an examination of the clinical trial protocol and the informed consent forms. The statement from the ethics committee should also be examined.

When providing cover for a clinical trial, a suitable risk questionnaire can provide structure to the underwriting process and help to capture the most important information clearly. This includes the duration and phase of the study, the number of participants, and the state of their health. A critical assessment of the claims management resources that are in place should also be carried out, including the expertise of the parties involved.

In countries where special regulations are already in place, such as the COVID-19 declaration about liability in the U.S., it’s important to make sure that all documents relating to the clinical test, including the informed consent forms of the participants, describe the purpose of the clinical test clearly, fully and in accordance with the relevant requirements.

With COVID-19 studies under pressure to succeed, and quickly, thorough risk assessment is invaluable.

  1. (as of 9 April 2020)
  7. Hogan Lovells: Navigating Limits on Product Liability under the PREP Act for COVID-19 Clinical Trial Activities;


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