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Cell and gene therapies: managing risk at the frontiers of life science

October 12, 2021

Investment in cell and gene therapies is booming following the success of mRNA-based COVID-19 vaccines. While embracing the opportunities, life science companies should be aware of potential risks and long-tail liabilities.

The Pfizer-BioNTech vaccine was the first to genetically engineer cells, using altered mRNA, to instruct them to make proteins that block COVID-19.

Its success, and that of the Moderna vaccine that followed, have brought a flood of money into cell therapy research and development, opening the doors for new vaccines and treatments using the same mRNA technology.

These include potentially transformative treatments for conditions such as cancer, malaria and cystic fibrosis, now in the pipeline.

Gene therapies work at a more fundamental level than cell therapies, editing genetic material to permanently change the cell structure and potentially reverse a disease or condition.

Gene therapies work at a more fundamental level than cell therapies, editing genetic material to permanently change the cell structure and potentially reverse a disease or condition.”

Joaquin Uy | Deputy Head, Corporate Risk & Broking – Philippines

They have significantly longer lead times than traditional treatment, and only a few are currently approved, such as a treatment for retinal malfunction.

But even here, new advances are pushing the science forward and removing the roadblocks to development.

Trials are underway for treatments that could reverse some cancers and even enable HIV to be permanently removed from the body.

In this article, we look at some of the main challenges and risks facing life science businesses operating in this fast expanding field, and steps they can take to manage them.

What do life science businesses need to consider?

Regulation of clinical trials

Because many cell and gene therapies cannot be reversed, there are strict rules on how they are carried out and who can take part, which can complicate and delay the trial process.

Typical trial periods are much longer than the year it took to approve COVID-19 vaccines.

For gene therapies, trials can be up to 15 years, reflecting uncertainty about their long-term effects.”

Joaquin Uy
Deputy Head, Corporate Risk & Broking – Philippines

For gene therapies, trials can be up to 15 years, reflecting uncertainty about their long-term effects.

These factors can make it harder to get good insurance cover that extends over the whole period.

In most trials, participants sign a consent form that limits liability to a set compensation amount if things go wrong.

However, this may not cover the extent of the losses, and patients and/or insurers may be able to sue the manufacturer if they can show error or negligence in the trial process. 

Long-tail impacts

Cell and gene therapies are new technologies. It’s impossible to be certain about how they will impact patients in the long-term.

But most insurance policies only honour claims made during the policy period, even though the damage may only manifest itself years later.

Also, limits tend to be relatively low and are often aggregated.

This means that total claims in any one year cannot exceed a certain amount, leaving potential gaps in cover.  

High up-front costs

Cell and gene therapies are very complex and difficult to translate from lab experiments to treatments that can be used on patients and replicated at scale.

One gene therapy treatment can cost more than $1 million.

One gene therapy treatment can cost more than $1 million.”

Joaquin Uy | Deputy Head, Corporate Risk & Broking – Philippines

Although this is usually a one-off lifetime cost, insurers are used to dealing with traditional drug treatments and may have to evolve their wording to deal with this level of risk.

Supply chain dependencies

Cell and gene therapies often have complex supply chains with critical dependencies.

Development work may be split among different countries with different manufacturing specialities.

Products and components are often highly sensitive to handling and temperature.

If damaged, it might take months to create replacements.

Each of these factors can lead to supply shortages.

As interest in gene therapies has expanded, manufacturers have struggled to keep up with demand for the viral vectors that are used to deliver genetic information into cells.

While manufacturing techniques are improving, all of these factors can add to business cost and risk.

What can life science businesses do to protect themselves?

  1. 01

    Check your terms and conditions

    Reviewing your policy terms carefully can save you in the long term.

    Make sure that the retroactive (‘retro’) date in your policy goes back far enough to pick up damages from products and treatments delivered in previous years.

    If possible, negotiate an extended reporting period, which gives potential claimants more time to report claims after the relevant cover period.

    If your policy has aggregated limits, make sure you are comfortable with the level of cover they provide. 

  2. 02

    Build supply chain resilience

    Cell and gene therapies typically depend on multi-site global supply and contracting, especially during early-stage development.

    This makes it critical that you audit and assess your supply chain exposures.

    Is there a weak link that could bring your operations to a standstill?

    Make sure you have back-up and a plan for what to do if this happens.

  3. 03

    Know your partners

    With such long-term commitments involved in cell and gene therapy, you need to be extra careful about your partners.

    Carry out due diligence and be very careful when signing contracts that you know and understand the obligations and liabilities that these agreements expose you to.

  4. 04

    Think about what you say and do

    In a highly regulated and sensitive market, what you do and say as directors can rebound on you and the company.

    For example, if you make a positive statement on Monday that sends share prices up, then the regulator refutes it on Tuesday and share prices crash, you can be sued for damages. U.S. policies in particular have large excesses for such claims. 

  5. 05

    Plan ahead

    Given the timescales involved and the size of potential exposures, it’s unlikely that you will be able to cover every risk with insurance.

    Plan ahead, particularly for product liability cover post-launch.

    Think about the limits you want to buy and how you will cover the rest, for example through reserves or a captive.

    Remember that risks and potential losses will scale up during commercialisation and launch.

  6. 06

    Work with specialist insurers

    Cell and gene therapy is a very specialised business.

    You need insurers who know and understand it to give you the right advice and cover.

    A cheaper quote from a generalist insurer might turn out to be very bad value when you later discover you aren’t covered for an event.

  7. 07

    Be aware of transit risks

    Make sure you are covered for the full value of your products and components in transit. This is a typical area where losses occur.

Any questions?

Please get in touch if you’d like to find out more about cover for your life science business.


Deputy Head, Corporate Risk & Broking, Philippines


1 Statement from FDA Commissioner Scott Gottlieb, M.D. and Peter Marks, M.D., Ph.D., Director of the Center for Biologics Evaluation and Research on new policies to advance development of safe and effective cell and gene therapies

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