The 21st Century Cures Act, enacted in 2016, is credited with helping to revamp the regulatory landscape for medical breakthroughs, helping to speed up the approval process for new drugs. Yet for a mix of reasons, the pharmaceutical industry has been lukewarm about efforts to pass a sequel to the legislation, dubbed Cures 2.0.
Among other issues, there’s concern that key elements of the original legislation have yet to be implemented. What happens next is uncertain, but none of this is helping carriers that underwrite risk in the life-sciences industry.
Why? Well, because the Cures Act focused on high-risk, high-reward research outcomes associated with increased liability for the drug companies.
In other words, while fast-tracking promising drugs means delivering new treatments to desperate patients, it also poses an inherent risk.
It’s easy to imagine a jury considering it reckless and irresponsible to speed up processes without spending sufficient time monitoring a medication’s effects.
Hence the greater litigation risk for pharmaceutical companies.
The insurance marketplace for life sciences companies is already complicated, laden with customized policies written to meet the multifaceted needs of the pharmaceutical world.
Coverage tailored to your specific risks sounds good, of course, and there’s nothing like getting and paying for exactly what you need and nothing more. But when the language in one carrier policy vs. another vs. yet another diverges wildly, it can make the job of selecting the right policy a whole lot more difficult.
The changing liability landscape presented by the 21st Century Cures Act is still being digested and so a follow-up to the original won’t make things any easier.
In fact, it’s fair to say that if you were to multiply the number of insurers by the number of changes resulting from the 21st Century Cures Act alone, the effect is a field of liability land mines, as well as potential errors for insurers and their insureds.
Not to sound like an insurance geek, but it creates what we call a very complex horizon of shifting risks.
The sponsors of Cures 2.0 say theirs is an effort to modernize coverage and access to life-savings cures. Their new legislation includes a focus on how technology can be used to improve care management. That sounds good. But all of these changes bring to mind the law of unintended consequences.
Even when we set aside new, potentially risky drugs, life sciences companies are a “popular” target of class-action litigation, drawing more than three times as many such suits last year compared to five years earlier.
The bottom line here? Whether it’s bodily injury or property damage stemming from the research, design, manufacture, distribution or marketing of new pharmaceuticals, you need an insurance brokerage that understands the risks of being on the front lines of the life sciences world.
Michael Ferentinos is a CCIG Insurance Advisor. Reach him at Michael.Ferentinos@thinkccig.com or 720-212-2043.
CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.
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