New drugs are a constant target of substantial product liability lawsuits.
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The pharmaceutical market worldwide has enjoyed stable conditions for many years. The value of the global prescription drug market was estimated to be USD 1.27 trillion in 2020, with a 46% revenue share of the US market. The global market is expected to reach USD 1.7 trillion in 2025. The most important global players are still located in Western industrial countries with a majority in the United States.
R&D activities in pharmaceutical companies focus on substances for long-term use in connection with, for example, cancer, chronic inflammatory diseases, diabetes, rare (orphan) diseases, chronic neurological and psychiatric conditions and, since the outbreak of the Covid-19 pandemic, in vaccines.
Substantial research is currently being done on biopharmaceuticals (monoclonal antibodies and immunosuppressants). Drugs derived from monoclonal antibodies are the fastest growing sub-segment of the market. The global monoclonal antibody therapy market size was USD 157.3 billion in 2020. The market is projected to grow to about USD 450 billion in 2028. In contrast to this, expenses for short-term use substances like antibiotics have been decreasing for many years. Consequently, the pipeline for new antibiotics has more or less dried up.
Another major topic for pharmaceutical research relates to drug delivery. Studies look at the design and evaluation of drug delivery systems, emphasizing some methods of delivery such as liposomes and liquid crystals. Research in the area of pharmaceutical cell biology aims to understand basic cell biology and relate the findings to diseases in humans. Scientists deal with topics such as inflammation processes in human diseases, mechanisms for cell-to-cell communications and mechanisms of carcinogenesis.
The focus of global research and development activities here is on two concepts of individualised gene therapy, CAR-T cell therapy and genome editing (CRISPR/cas method).
In recent years, it was particularly evident in the US and EU that lawmakers appear to place a heightened emphasis on accelerating the drug approval process, especially where drugs designed to treat specific subgroups of diseases are concerned. The consensus appears to be that accelerated drug approval will incentivize drug research and development by reducing the administrative burden and cost of novel drug development.
One of the reasons behind this move was that the pharmaceutical industry has experienced difficulty in maintaining the pace of new drug development, which in turn has endangered the continued potential profit return of investors. Furthermore, politicians on both sides of the Atlantic increasingly argue that the present licensing systems constitute an impediment to providing patients with much-needed live-saving medicines.
However, adaptive licensing may have not only a positive commercial effect. By their very nature, adaptive licensing systems may bring pharmaceutical products to the market which have not been subject to full clinical testing and review as we know it. For one thing, adaptive licensing could well force supervisory authorities to issue more label warnings. But more importantly, patients may suffer from side effects that have not yet been detected and therefore are not reflected in the warnings. Adaptive licensing may therefore adversely affect the pharmaceutical industry and their insurers and reinsurers.
The development of pharmaceutical liability claims in particular in the United States has been concerning because of the multi-million dollar amounts the manufacturers and the insurance industry have had to pay in recent years due to alleged adverse and unforeseeable side-effects (main accusation: failure to warn and design defect). One factor contributing to this scenario involves the fact that most of the drugs developed are intended for a high number of patients, which itself essentially leads to a high number of possible claimants. Moreover, patients taking such drugs thereby expect to become healthier, which leads to an increased willingness to act against the doctor or the manufacturer in the event that such a drug should be (deemed) deficient. While pharmaceutical risks are not a specialty in most markets, the various peculiarities of the American legal system make it particularly difficult for international (re)insurers to write product liability for pharmaceutical risks there.