In recent years, South Korea has focused on the health care and biopharmaceutical industries as new growth engines for the national economy. As a result, the country has quickly become one of the most popular locations for human clinical trials.
Between 2004 and 2009, the number of clinical trials taking place in South Korea more than doubled, moving the country's ranking from 34th internationally (based on the number of trials) to 12th, according to ClinicalTrials.gov, a service of the U.S. National Institutes of Health. But for trial sponsors, the insurance climate in South Korea is very different than what they may be accustomed to in the United States.
Typically, trial sponsors purchase product liability insurance that provides coverage should a study participant be injured during a human clinical trial. Similar policies are available in South Korea, but there are some important distinctions. The amount of coverage is much lower in South Korea, for instance. The limits for the typical policy purchased in South Korea are usually $100,000 to $300,000 compared with $2 million to $10 million in the United States. Terms of coverage are also different. The standard policy in South Korea provides coverage for medical expense and indemnity, but does not cover legal liabilities. The amount of compensation provided under the policy is determined through an adjudication process, but to receive the compensation, the injured party is required to waive the right to sue. If the study participants do not waive the right to sue, the sponsor faces the threat of legal liability without any insurance protection to help minimize a loss.
When trial sponsors conduct trials, they rely on hospitals and clinical research organizations to assist them with their studies. In the United States, these partners typically purchase insurance, which helps to reduce the burden on the trial sponsors by ensuring that the partners are also protected from a loss. But in South Korea, sponsors cannot assume that hospitals and clinical research organizations have adequate insurance. Hospitals often do not purchase medical malpractice insurance, and even if they did it would not be of much help for trial sponsors since medical malpractice policies in South Korea have a total exclusion for human clinical trials. In addition, Korean clinical research organizations also do not usually purchase errors and omissions coverage, leaving trial sponsors exposed in the event a costly trial has to be repeated because of a flaw in the design or implementation of the study.
Another risk involves jurisdiction. A case involving pharmaceutical giant Pfizer illustrates the exposure. In June, the U.S. Supreme Court granted Nigerian families the right to sue Pfizer over the testing of an experimental antibiotic on their children. A federal judge initially said the cases should be heard in Nigeria, not the United States, but the 2nd U.S. Circuit Court of Appeals in New York later overruled this. As the case shows, even though an organization may be conducting a trial outside of the United States, it is still at risk of being sued in a U.S. court. Locally admitted policies from South Korea, however, may not respond in the event of a U.S. lawsuit.
As South Korea emerges as one of the top locations for human clinical trials, sponsors need to take a few important steps to protect themselves from unexpected losses. To ensure that they have coverage worldwide, multinational sponsors should have an annually renewable master policy with a global liability extension endorsement in addition to any locally admitted policies that may be needed to meet local requirements. Sponsors should vet clinical research organizations in South Korea to be sure they have the appropriate coverages before agreeing to work with them. And once a partnership begins, sponsors should make certain that the insurance is maintained.
Clinical Trial Insurance in South Korea
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