Life Sciences
In Life Sciences, value accumulates over years before a product exists, and much of it does not appear on the balance sheet: a batch of biological material, a validated room, a trial file. The cover accompanies this chain from protocol to market.
Clinical trials, intellectual property and product liability
The sponsor is responsible for the trial and the year following the treatment of each subject.
Insuring a life sciences company requires working with clocks that do not coincide. The clinical trial clock runs while the sponsor is legally responsible, and continues running a year after the treatment of the last recruited subject ends. The product clock starts when the drug reaches the market and allows for claims to take years to present. The intellectual property clock runs independently: a patent is defended the day someone challenges it, which can occur in either of the two previous periods.
The responsibility of the sponsor of a trial
Royal Decree 1090/2015 requires the sponsor of a clinical trial with medicines to have insurance or an equivalent financial guarantee, and presumes, unless proven otherwise, that damages affecting the health of the subject during the trial and during the year following the end of their treatment are a consequence of it. The calculation starts with the treatment of each subject, so the duration is based on the last visit of the last patient, which is considerably later than the administrative closure of the study.
Biological material and validated room
The conservation equipment has a known replacement value, and its content requires agreeing on its own valuation criteria. This criterion is agreed with the insurer before the claim, along with the indemnity period required to resume production, because a clean room resumes operation when its requalification is completed, which occurs well after the equipment repair.
Intellectual property as insurable capital
The patent and the file that supports it are the asset on which the company's valuation rests, and defending them against a third party is more a procedural expense than compensation. There are covers for the defence of industrial property rights that finance this expense, and in the opposite direction, the claim for infringement allows for an express agreement within civil liability. Both are contracted separately, with their own limit and with the territory delimited, because a patent is valid where it is registered.
Multicentric trials and admitted cover
Each country sets its own minimum guarantee and its own way of accrediting it, and in several of them, the policy must be issued locally. Resolving it with a master and admitted locals prevents the opening of a centre from depending on a certificate that is not valid there.
The covers that support a company in this sector
Each one is designed based on the company's real exposure. None are contracted the same in two companies in the same sector.
Lo que nos preguntan en life sciences
What insurance does the regulation require to promote a clinical trial?
Royal Decree 1090/2015 obliges the promoter of a clinical trial with medicines to have insurance or an equivalent financial guarantee that covers damage to the subject. Low-intervention trials are exempt from this specific requirement when potential damages are covered by the liability insurance of the centre or the participating professional, and checking this in writing before starting avoids discovering the gap with the study underway. In other cases, the regulation presumes that damages appearing during the trial and in the year following the end of the treatment are a consequence of it, so the cover must reach that period.
Once the trial is completed, must its policy be maintained?
Yes, at least during the year following the end of the treatment that Royal Decree 1090/2015 places within the presumption of causality, and afterwards as long as the subject's action remains active. This cover is not replaced by product cover, which starts when the medicine reaches the market and responds to something else. They coexist for a time, and the order between them is agreed upon before closing the study; when moving from trial to market, the retroactive date is what keeps the already completed study covered.
How is a batch of biological material insured?
By agreeing with the insurer on the valuation criteria before the claim, because the cost of reproducing it does not match any accounting value. Based on this, the machinery breakdown guarantee of the conservation equipment and the indemnity period are dimensioned, which must extend to the requalification of the room, following the repair of the equipment.
What we have published about these risks
Product liability and recall expenses: two covers that are confused daily
One covers the damage caused by the product. The other pays for the operation of removing it from the market before it causes damage. They are not the same guarantee.
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European AI Regulation: what changes for the liability of those who implement it
The regulation classifies systems by risk and imposes obligations on both the provider and the company that uses them. Insurance is still lagging behind.
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