Life sciences

In this chapter of our Annual Insurance Review 2021, we look at the main developments in 2020 and expected issues in 2021 for life sciences.

Key developments in 2020

The prevailing narrative of COVID-19 was interrupted on 8 July 2020 when the Independent Medicines and Medical Devices Safety Review (the Review), chaired by Baroness Cumberlege, published its report. The Review examined the response of the health system to concerns raised over pelvic mesh, sodium valproate and hormone pregnancy tests. 

The Review concluded that all elements of the healthcare system share in the blame for failures: the NHS, private providers, regulators, professional bodies, manufacturers and policymakers. 

The implications for the healthcare system go beyond just the three products that were scrutinised by the Review.

Two recommendations, if adopted, may affect Insurers' exposure to the costs associated with life sciences personal injury litigation. 

The Review proposed the establishment of a "redress agency", a non-adversarial process to compensate those injured patients. It also proposed a "cost-of-care" scheme to provide payments for the cost of additional needs incurred by patients where products have failed. 

Substituting protracted and costly litigation for swifter methods of redress for patients could save on litigation costs. However, industry will be concerned if overall compensation rates grow and the cost is passed back to manufacturers and their Insurers. 

Once the Government's attention moves on from COVID-19, campaign groups are expected to renew calls for the Government to implement Baroness Cumberlege's findings. Insurers will be watching to see whether the recommendations lead to significant changes in how patients are compensated where life sciences products allegedly fail.  

What to look out for in 2021

COVID-19 has thrown new focus on the potential of Artificial Intelligence (AI) to move healthcare into a new era.

Whilst new vaccines have generated the biggest headlines, AI has been used to analyse large-scale data sets to source better treatments for COVID-19. AI has also reduced the amount of time needed to discover, test and receive approval for repurposing existing approved drugs. AI has also been used at an individual patient level for diagnosis and treatment of COVID-19, particularly in reviewing radiology.

As healthcare budgets are squeezed and waiting lists grow following the pandemic, Insurers can expect hospital procurement managers in 2021 to place more emphasis on using AI in the search for faster diagnoses and more efficient treatments.

Insurers of AI manufacturers will want to work closely with their clients to reduce the associated risks of litigation.  Claims about performance should be supported by clinical evidence. Insurers should check that guidance accompanying a product covers the systems needed to integrate new technology. 

More importantly, Insurers should scrutinise contracts that allocate liability between parties involved in the supply chain of bringing AI to hospitals. NHSX (the body with responsibility for setting policy concerning the use of technology in the NHS) now advocates for contracts to include more robust indemnities in favour of hospitals, in the event of allegations that AI causes, or contributes, to injury or death in patients. 

2021 may prove to be a year in which AI becomes essential to healthcare and offers a cause for optimism across a range of clinical challenges. Insurers should pay close attention to how their clients bring AI products to the market.