There is often confusion around insurance coverage for patient medical care stemming from the adverse effects of clinical trials. To help bring clarity, it’s important to first understand the fundamental purpose and coverage differences between Clinical Trials Liability Insurance and Traditional Health Insurance.
| Clinical Trials Liability Insurance | Traditional Health Insurance |
|---|---|
| Insurance purchased by a life science company primarily to provide protection in the event of third party claims alleging bodily injury to a participant of a sponsored clinical trial. | Insurance to provide medical expense protection — typically employer sponsored for the benefit of participating eligible employees and their eligible family members, or individually purchased. |
| Designed to cover legal defense costs and damages (awarded or via settlement) stemming from injury claims/lawsuits, including damages for medical costs associated with the alleged injury. | Designed to cover the costs of preventative care and treatment for a wide array of medical conditions encountered by plan participants, with limitations and out of pocket costs detailed in a plan summary. |
| Participants are typically directed to contact the trial site when they experience trial-related symptoms that require medical attention, and the sites must provide the necessary care. But often, the costs are not reimbursed/covered by the liability policy. | Coverage generally excludes medical care related to adverse events directly related to experimental products in clinical trials, but does include medical care to treat the health impacts related to the underlying disease or illness itself. |
The distinctly different purpose and scope of these coverages makes it clear that there is a coverage gap when it comes to clinical-trial-related medical costs — particularly large, unexpected expenses. But what’s driving the gap?
From a practical standpoint, the expectation that clinical trials liability insurance should act like traditional health insurance is not realistic when you consider the cost dynamics. As you can see in the comparison below, it is unlikely there would be a competitive clinical trials liability insurance market today if these policies provided broad health-insurance-like medical cost coverage for trial-related medical care.
| Clinical Trials Liability Insurance | Traditional Health Insurance |
|---|---|
| Because of its limited scope, clinical trials liability insurance is relatively inexpensive. For example, an oncology company conducting a small trial could secure a $5 million policy, that encompasses the entire patient population enrolled in single or multiple clinical trials, for as little as $15,000 annually. | The broad coverage under a traditional health plan comes at a much higher cost. Family premiums for employer-sponsored health insurance rose 7% this year, reaching a per-family average of $25,572 annually, with employers contributing $19,276 per family and workers contributing the $6,296 difference. |
| The controlled purpose, conditions, protocols and constant medical monitoring under which clinical trials are conducted, combined with participants’ acceptance of disclosures and warnings about the potential risks, contribute to low claims frequency and hence the dramatically lower price point. | While plan summaries outline coverage, out-of-pocket costs and coverage limitations, the high costs reflect utilization for a broad spectrum of covered conditions and the expectation that most claims will be paid, regardless of what caused or contributed to the underlying condition for which treatment is sought. |
There is no one-size fits-all solution when it comes to closing the clinical trials medical cost coverage gap. But there are several approaches that should be considered individually or in combination.
Much of the cost of treating patients for trial-related adverse effects is accounted for in the clinical trial budget itself. As long as costs remain relatively low there is no issue. However, trial budgets often fail to contemplate large claims, resulting in insurance gaps when the cost of patient treatment rises to a material level.
Many clinical trials liability policies offer some coverage for medical expenses — without a legal liability requirement — under a small sublimit, typically up to $25,000. Increasing this sub limit is a potential solution. Although it will drive up premium costs, this approach would also provide clinical trial sponsors with the apparatus to manage and pay claims.
It should be noted that when the insured is liable for injuries and there is no specific policy exclusion for the matter, medical expenses sought by the patient or others for whom liability may have been assumed are covered under the claim.
Currently, clinical trial sponsors are billed at standard hospital rates for medical care related to serious adverse events. In some cases costs are reaching millions of dollars for treatment of a single patient. Clinical trial sponsors should consider negotiating with sites for terms more consistent with those in place for health insurer managed care networks or Medicare.
Life science companies concerned about the impact of clinical trial patient medical costs need to work with a broker that has a verifiable track record of success providing guidance in this area. The experts at Conner Strong & Buckelew have the knowledgebase and deep industry expertise to help your organization build a strategy designed to mitigate the impact of large, unexpected medical claims and protect your bottom line.
For more information on how our team can help, please reach out to your Conner Strong & Buckelew representative, call us at 1-877-861-3220 or email [email protected].
Daniel S. Brettler
Senior Partner, National Life Science & Technology Practice Leader
