Berkley Life Sciences, LLC, a member company of W. R. Berkley Corp., has released a new insurance created to address attempts to hold pharmaceutical and medical device companies liable because their drugs, devices or other life science products or components are in short supply. Life science companies struggling to address the growing shortage of critical life science products are potentially facing new litigation risks – and are quickly becoming aware that their existing insurance leaves them unprotected and vulnerable.
No Coverage under Traditional Liability Policies
Traditional product liability policies generally do not address claims alleging injury to patients due to the unavailability or rationing of a product; they provide coverage only where product use or exposure causes bodily injury. For this reason traditional liability policies may not even provide a defense to product shortage claims. This creates a serious coverage gap for life science companies that could result in significant uninsured loss.
Berkley Life Sciences has designed insurance specifically to address product shortage losses. Provided as an enhancement to its LS Prime insurance policy, Product Shortage Coverage responds to third party claims of injury because of the unavailability or rationing of a life science product. Even though a court may ultimately refuse to sanction a product shortage claim, coverage is available for the cost of defense.
In addition to the threat of litigation, life science companies often incur significant first party costs to address public concern over a product shortage. Berkley Life Sciences has created an insurance product to reimburse the insured for these first party costs, which can include such items as responding to the FDA; monitoring customers’ health conditions throughout the shortage; and locating stolen or counterfeited product.
“The AMA has declared the growing unavailability of life saving and life enhancing products to be a ‘national public health emergency,'” said Jill Wadlund, president of Berkley Life Sciences. “This pronouncement has spawned attempts by some law firms to hold the pharmaceutical and medical device industry responsible for critical product shortages. This coverage addresses both the litigation risks and increased first party costs associated with a product shortage crisis.”
LS Prime is issued in 49 states through Gemini Insurance Co., and in Delaware through Nautilus Insurance Co.
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