Cover for clinical trial is not a me-too product

Written by ENS Economic Bureau | New Delhi | Updated: May 13 2013, 14:21pm hrs
The clinical trials industry clocks a turnover of over $50 billion globally every year. But India despite the potential of a large population garners less than $500 million of this business, or about 0.1 per cent.

Yet the obvious advantages of India make it a first class base for the industry because of the large population base with diverse ethnic groups which are now supplemented by well equipped hospitals and strong IT infrastructure to back them up. While the clincher is obviously the relatively low cost of conducting the trials the presence of trained and qualified medical personnel to carry out the tests and a strong legal framework for the trials is an additional advantage.

As the market has grown, over 100 pharmaceutical companies and Contract Research Organisations are now actively involved in carrying out clinical research for all kinds of trials and new chemical entities. The problem is the lack of good insurance coverage for the sector that will cover the patients and make it less than financially crippling for the entities for cases when accidents do happen. And this is a real scare.

For instance sector has been under the spotlight over the last year as reports of unethical practices in conduct of clinical trials leading to deaths of trial patients raised an outcry.

The role of the regulator, Central Drugs Standard Control Organisation was questioned by the Parliamentary standing committee on health and family welfare which claimed the regulator has apparently put the interests of the drug industry ahead of consumers. Even the Supreme Court has observed that uncontrolled clinical trials are causing havoc to human lives.

In this context the Drugs and Cosmetics Rules, 1945 have been amended posing an increased burden on the companies (sponsor/his representative) to provide for financial compensation to trial subjects if they meet with an injury or death.

There are three amendments of the rules; each designed to make the compensation process transparent for persons who volunteer for clinical trials. But insurance companies now claim what has happened is the government has ended up including provisions where compensation is payable even for cases that have no connection to the clinical trial but have happened to the subjects.

This, insurance companies say, are dicey to factor in. There are also provisions for free medical management as long as required, a sort of an open ended claim for insurance cover.

As Praveen Gupta, MD and CEO of Raheja QBE General Insurance Company says,To take an example, a subject meeting with an accident causing spinal injury leading to paraplegia is likely to require medical management for the rest of his life. Does this mean that even if this accident is caused by a speeding vehicle, the sponsor may have to pick up the tab

Excerpts from an interview on the specialist sector:

You are one of the rare insurers offering a cover for clinical trials. But the market seems to be a slow mover. Why

This is not a me-too product. It comes as a time-tested solution from the QBE stable, in the UK, where the Medical Liability underwriting team is a centre of excellence since 2002. Yes we are a specialty insurer. But the cornerstone of our effort is to make available solutions of international standards to customers in India. As regards clinical trials specifically liability insurance is concerned, as I said the best practices and support come to us from our QBE Medical Liability centre of excellence, based out of London.

There have some rules issued by the government expanding the scope of coverage by the insurer for such trials. To what extent do these rules make the insurance product costly

The evolving regulations make a strong case for a solution rather than a product. This calls for case specific tailor-made solution. Depending on the complexities and combinations, price will vary.

In the recent past, the oversight of this segment has evolved rapidly, which we feel is resulting in gaps in available risk transfer solutions. We have been closely studying these developments and believe that we can assist and effectively fulfil our customers needs on this front.

Before issuing the expanded coverage possibility did the government consult the insurance industry about the possible impact on premium and global experience.

These, I think, are two unrelated developments. The main challenge was, and is, to effectively manage an emerging risk. Significant learning and bench-marking comes from the likes of the USFDA. Insurance is a means of exploring risk transfer mechanism. Yes there is a concern about the new rules provide for free medical management as long as required in case of injury occurring during clinical trial. This is required even where injury is not related to the clinical trial. So in cases of all such injury or death is related to the clinical trial, financial compensation is to be paid.

Other than clinical trials, insurance covers like directors policy too seem to be a slow starter despite the expansion of subjects like corporate governance in the Companies Bill. How do you assess that

Directors and officers liability insurance is on the threshold of a take-off. The trigger, according to me, will come from the passage of the Companies Bill.

Raheja QBE is a speciality insurer. How supportive is the insurance regulator to the development of niche products in India

All our products have come into being with the support and active involvement of our regulator.

But the general insurance sector in India does not seem to be coming up with new products in the past few years. What could be the reason

New products are being introduced from time to time. Just that the growing humongous volumes of motor and health insurance tend to overwhelm the rest of the lot.