Pharmaceutical Manufacturers Insurance Policy Information
Pharmaceutical Manufacturers Insurance. Any company that develops, tests, manufactures, and distributes medications can be considered a pharmaceutical company. While many people will immediately think of well-known global industry giants, the truth is that small startups developing just one promising drug also fall under this branch of industry.
Pharmaceutical manufacturers produce over-the-counter drugs such as antacids, antiseptics, cough drops or syrups, mild painkillers, and vitamins, and prescription drugs, including controlled substances, which may be patent-protected or generic.
Drugs are made from a variety of raw materials which may be organic, chemical, or synthetic. Processes may include aeration, blending, crushing, filtering, freezing, heating, mixing, molding, pressurizing, or washing.
The end product may take a variety of forms such as capsule, jelly, liquid, pill, powder, spray (aerosol or non-aerosol), suppository, or time-release patch. Cleanliness, purity, and the proper mix of ingredients are critical.
Pharmaceutical manufacturers have laboratories engaged in product development, testing, and quality control. Products must pass rigid clinical trials before being approved by the Food and Drug Administration (FDA) for use by consumers.
Although the development of medications can ultimately be a profitable business, these companies are also subject to strict regulations. Many of the pharmaceuticals they test will never enter the market.
The drugs that pharmaceutical companies develop, make, and distribute may save lives or greatly improve the quality of life for numerous patients - but medications can also have adverse effects that may, in the worst cases, prove to be life threatening.
What types of pharmaceutical manufacturers insurance might companies in this industry carry to protect their business interests in the event of catastrophic circumstances? To find out more, read on.
Pharmaceutical manufacturers insurance protects your manufacturing business from lawsuits with rates as low as $97/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked pharmaceutical manufacturing insurance questions:
- What Is Pharmaceutical Manufacturers Insurance?
- How Much Does Pharmaceutical Manufacturers Insurance Cost?
- Why Do Pharmaceutical Manufacturers Need Insurance?
- What Type Of Insurance Do Pharmaceutical Manufacturers Need?
- What Does Pharmaceutical Manufacturers Insurance Cover & Pay For?
What Is Pharmaceutical Manufacturers Insurance?
Pharmaceutical manufacturers insurance is a type of insurance policy specifically designed for companies that produce and distribute pharmaceutical products.
This insurance covers a wide range of risks related to the production and distribution of pharmaceuticals, including product liability, property damage, loss of income, and legal defense costs. It also protects against third-party claims for injuries or illnesses caused by the use of pharmaceutical products.
This insurance is essential for companies in the pharmaceutical industry, as it helps protect against financial losses due to lawsuits and other types of claims.
How Much Does Pharmaceutical Manufacturers Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small pharmaceutical manufacturing businesses ranges from $97 to $159 per month based on location, size, revenue, claims history and more.
Why Do Pharmaceutical Manufacturers Need Insurance?
All commercial ventures face a multitude of risks. Even a stay-at-home mom running a muffin delivery business on the side faces, for instance, the risk of being sued if her product contained traces of peanuts that were not advertised, and a customer has an anaphylactic reaction.
As companies that manufacture medications produce products that can easily have life and death implications, however, there is no doubt that pharmaceutical companies have an extremely complex risk profile.
Pharmaceutical companies can fall victim to some of the same threats that are universal to any business. A facility may be hit by an act of nature such as an earthquake, hurricane, lightning strike, or wildfire.
Essential manufacturing equipment may suddenly breakdown, requiring repair or replacement. Even criminal acts like theft or vandalism can have serious financial consequences.
They also have to contend with a whole host of industry-specific risks, however. Products may have serious side effects that cause permanent harm. Other companies may ignore patents and illegally reproduce pharmaceuticals. Inventory may be lost to expiration dates. Cyber criminals may gain access to ongoing research and make it public.
Although nearly all businesses require insurance, pharmaceutical manufacturers insurance coverage that protects against all possible perils is a particular priority for companies within the pharmaceutical industry.
What Type Of Insurance Do Pharmaceutical Manufacturers Need?
Each company has unique insurance needs that depend on factors as varied as the exact types of medications they manufacture, the markets they serve, the location of their manufacturing facility or facilities, and the size of their company.
Pharmaceutical companies will, like manufacturers in any other field, need to partner with skilled commercial insurance agents to ensure that they are protected against all perils that may impact their field.
While pharma companies depend on insurance more than companies in other industries, they, too, need to carry the following essential types of pharmaceutical manufacturers insurance:
- Commercial Property: This type of pharmaceutical manufacturers insurance is designed to shield companies from financial losses if their facilities are struck by acts of nature, theft, vandalism, and certain other accidents that cause property loss or damage. It will (partially) cover the costs of damage to their building(s), but also physical assets therein, such as industrial equipment and raw materials.
- Commercial General Liability: Liability insurance exists to help cover the costs associated with third party property damage or physical injury claims. It exists in various subcategories. General liability insurance may cover events such as third parties being injured on a company's property or a malfunction within their facility causing damage to a neighboring property.
- Product Liability: Covers the costs that can follow if a third party, such as a patient, is harmed by a product.
- Product Recall: Designed to cover the expenses associated with product recalls, this type of insurance is also essential to pharmaceutical companies.
- Environmental Or Pollution: Is an essential in case hazardous substances are spilled into the ecosystem.
- Workers Compensation: This type of insurance covers the medical expenses and any lost wages of employees who sustain workplace injuries or illnesses for which the company is held liable.
Pharmaceutical manufacturers insurance policies can be complicated, and businesses in this field may further require cyber insurance, commercial auto insurance, equipment breakdown insurance, and intellectual property insurance (in case another company reproduces a medication).
Pharmaceutical Manufacturing's Risks & Exposures
Premises liability exposures are normally low to moderate unless aerosols are manufactured or stored on premises. Although tours may be conducted, access by visitors is usually limited and controlled due to the need for a sterile environment.
Visitors may be injured by slips, trips, or falls, or may be exposed to toxic or caustic chemicals. Fumes, spills, or leaks from tanks may cause serious injury or property damage to neighboring properties.
Pharmaceutical manufacturers generally have traveling sales representatives who visit drug store chains, doctor's offices, and trade shows. Large sales cases or exhibition materials may present tripping hazards that could result in injuries to customers or the general public.
Products liability exposures are severe due to the potential for bodily injury, including sickness and death, to consumers of finished products. Quality control at all phases of the operation from product development to packaging is critical to reduce the exposure to injury.
Significant injuries or damage may follow from improper processing or mixing of ingredients, improper storage, during transport or even inappropriate packaging and labeling.
Packaging should include information addressing possible side effects and inform consumers of action that should be taken in the event of an allergic reaction. Factors affecting risk include whether the medicine produced is available over the counter or by prescription only; whether it is an established medicine (such as aspirin) or is newly developed; and whether it is the result of the manufacturer's research only, or is supported by academic research.
Lack of compliance with government regulations and controls may dramatically increase hazards, and may also make defense of claims difficult. There should be a plan for recalling defective products.
Environmental impairment exposures are very high. Sudden or cumulative discharges of chemicals may contaminate air, surface or ground water, or soil. Disposal procedures must adhere to all EPA and other regulatory standards. Processes themselves may cause thermal or noise pollution. If there are underground tanks, a UST policy will be required.
Workers compensation exposures may be high. Injuries from production machinery are common, as are burns, cuts, slips, trips, falls, hearing loss from machinery noise, and back injuries from lifting. Employees should be provided with safety training and protective equipment. Ergonomically designed workstations can prevent repetitive motion injury.
Aerosol containers may explode and injure workers. Ingredients may be toxic and/or caustic, with a high potential for injury to eyes, lungs, or skin. Workers must be made aware of the potential side effects, including long-term occupational disease hazards, so they can be aware of warning symptoms and obtain treatment as early as possible. Drivers of forklifts and vehicles may be injured in accidents.
Property exposure consists of an office, production plant, and warehousing of raw materials and finished goods. Ignition sources include electrical wiring, heating and cooling equipment, overheating of production machinery, buildup of static electricity, escape of fumes from storage tanks, and refueling of forklifts.
The large draft spaces in storage warehouses can contribute to the spread of a fire. Flammable lubricants and cleaning agents may be stored on premises. Some chemicals and final products may be spoiled by temperature change, humidity, dust or other factors. Due to the sterile conditions that must be maintained throughout the manufacturing process, even a small fire can result in a total loss to stock.
Raw ingredients and finished stock are expensive, and may be targeted by thieves who anticipate profits from black market sales. Vandalism can result from protestors. Appropriate security controls should be taken including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Business interruption exposure can be high because a large loss can result in lengthy downtime for repairing or replacing production equipment.
Equipment breakdown exposures include breakdown losses of processing systems, heating and cooling equipment, electrical control panels, and other apparatus. Breakdown and loss of use to the production machinery could result in significant loss, both direct and indirect, such as, time element.
Crime exposures are chiefly from employee dishonesty and theft of money and securities. The black market for pharmaceuticals, particularly controlled substances, makes many drugs and/or their raw ingredients targets for theft.
Employees may act alone or in collusion with outsiders in stealing money, raw materials, trade secrets, or finished stock. Background checks should be conducted on all employees. There must be a separation of duties between persons handling deposits and disbursements and handling bank statements.
Inland marine exposures include accounts receivable if the manufacturer offers credit to customers, computers (which may include computer-run production equipment), goods in transit, and valuable papers and records for customers' and suppliers' information as well as quality control testing results and proprietary formulas used for drugs.
Goods in transit may be damaged by fire, theft, collision and overturn, spillage, contamination or aerosol explosion. Some products require shipment in refrigerated vehicles to prevent spoilage.
Commercial auto exposure may be very high if the manufacturer transports raw materials or finished products. Haz Mat licenses may be required. Manufacturers generally have private passenger fleets used by sales representatives. There should be written procedures regarding the private use of these vehicles by others. Each driver should have an appropriate license and an acceptable MVR.
All vehicles must be well maintained with documentation kept in a central location. Transport of aerosols is hazardous because the products need to be kept at cooler temperatures. Refrigerated trucks used for this purpose as well as the transport of other drugs sensitive to temperature changes should be well maintained to prevent overheating and explosion.
What Does Pharmaceutical Manufacturers Insurance Cover & Pay For?
Pharmaceutical manufacturers can be sued for a variety of reasons. Here are a few examples and how insurance can protect them:
1. Product Liability: This is perhaps the most common reason for lawsuits in the pharmaceutical industry. If a medication causes harmful side effects or proves ineffective, patients might sue the manufacturer. In such a case, product liability insurance can protect manufacturers. This type of insurance typically covers the legal costs associated with defending the lawsuit, any settlements or judgments, and any required recall actions.
2. Misrepresentation: Pharmaceutical companies can be sued if they misrepresent their products, such as promoting a drug for off-label use or making false claims about a drug's effectiveness. A professional liability insurance, sometimes called Errors and Omissions (E&O) insurance, can cover the costs associated with such lawsuits. E&O insurance typically covers defense costs, settlements, and judgments.
3. Negligence in Clinical Trials: Lawsuits can arise if a participant in a clinical trial suffers an adverse reaction or if there is negligence in the conduct of the trial. In these cases, clinical trial liability insurance can cover the costs associated with legal defense, settlements, and judgments.
4. Patent Infringement: A pharmaceutical manufacturer could be sued if they are accused of infringing on another company's patent. Intellectual Property (IP) insurance can help in such situations. This insurance covers legal costs associated with defending against patent infringement claims and any settlements or judgments that might be awarded.
5. Regulatory Risks: Manufacturers can face lawsuits for non-compliance with regulations set by bodies like the FDA. Regulatory liability insurance can cover costs associated with such legal actions. These may include defense costs, public relations expenses, and any fines or penalties that are legally insurable.
Insurance policies can vary significantly in their specific terms and conditions. Therefore, pharmaceutical manufacturers need to carefully review their policies to ensure they have adequate coverage for the types of risks they face in their particular segment of the industry.
Commercial Insurance And Business Industry Classification
- SIC CODE: 2833 Medicinal Chemicals And Botanical Products, 2834 Pharmaceutical Preparations, 2835 In Vitro and In Vitro Diagnostic Substances, 2836 Biological Products, Except Diagnostic Substances
- NAICS CODE: 325411 Medicinal and Botanical Manufacturing, 325412 Pharmaceutical Preparation Manufacturing
- Suggested Workers Compensation Code(s): 4825 Extract Manufacturing, 4611 Cosmetics Manufacturing, 8045 Store - Drug - Retail, 8047 Store - Drug - Wholesale
Description for 2833: Medicinal Chemicals And Botanical Products
Division D: Manufacturing | Major Group 28: Chemicals And Allied Products | Industry Group 283: Drugs
2833 Medicinal Chemicals And Botanical Products: Establishments primarily engaged in: (1) manufacturing bulk organic and inorganic medicinal chemicals and their derivatives and (2) processing (grading, grinding, and milling) bulk botanical drugs and herbs. Included in this industry are establishments primarily engaged in manufacturing agar-agar and similar products of natural origin, endocrine products, manufacturing or isolating basic vitamins, and isolating active medicinal principals such as alkaloids from botanical drugs and herbs.
- Adrenal derivatives: bulk, uncompounded
- Agar-agar (ground)
- Alkaloids and salts
- Anesthetics, in bulk form
- Antibiotics: bulk uncompounded
- Atropine and derivatives
- Barbituric acid and derivatives: bulk, uncompounded
- Botanical products, medicinal: ground, graded, and milled
- Brucine and derivatives
- Caffeine and derivatives
- Chemicals, medicinal: organic and inorganic bulk, uncompounded
- Cinchona and derivatives
- Cocaine and derivatives
- Codeine and derivatives
- Drug grading, grinding, and milling
- Endocrine products
- Ephedrine and derivatives
- Ergot alkaloids
- Fish liver oils, refined and concentrated for medicinal use
- Gland derivatives: bulk uncompounded
- Herb grinding, grading, and milling
- Hormones and derivatives
- Insulin: bulk, uncompounded
- Kelp plants
- Mercury chlorides, U.S.P.
- Mercury compounds, medicinal: organic and inorganic
- Morphine and derivatives
- Oils, vegetable and animal: medicinal grade refined and concentrated
- Opium derivatives
- Ox bile salts and derivatives: bulk, uncompounded
- Penicillin: bulk, uncompounded
- Physostigmine and derivatives
- Pituitary gland derivatives: bulk, uncompounded
- Procaine and derivatives: bulk, uncompounded
- Quinine and derivatives
- Salicylic acid derivatives, medicinal grade
- Strychnine and derivatives
- Sulfa drugs: bulk, uncompounded
- Vegetable gelatin (agar-agar)
- Vitamins, natural and synthetic: bulk, uncompounded
Description for 2834: Pharmaceutical Preparations
Division D: Manufacturing | Major Group 28: Chemicals And Allied Products | Industry Group 283: Drugs
2834 Pharmaceutical Preparations: Establishments primarily engaged in manufacturing, fabricating, or processing drugs in pharmaceutical preparations for human or veterinary use. The greater part of the products of these establishments are finished in the form intended for final consumption, such as ampoules, tablets, capsules, vials, ointments, medicinal powders, solutions, and suspensions. Products of this industry consist of two important lines, namely: (1) pharmaceutical preparations promoted primarily to the dental, medical, or veterinary professions, and (2) pharmaceutical preparations promoted primarily to the public.
- Adrenal pharmaceutical preparations
- Anesthetics, packaged
- Antibiotics, packaged
- Antihistamine preparations
- Antiseptics, medicinal
- Astringents, medicinal
- Barbituric acid pharmaceutical preparations
- Belladonna pharmaceutical preparations
- Botanical extracts: powdered, pilular, solid, and fluid, except
- Chlorination tablets and kits (water purification)
- Cold remedies
- Cough medicines
- Cyclopropane for anesthetic use (U.S.P. par N.F.), packaged
- Dermatological preparations
- Dextrose and sodium chloride injection, mixed
- Dextrose injection
- Digitalis pharmaceutical preparations
- Effervescent salts
- Emulsifiers, fluorescent inspection
- Emulsions, pharmaceutical
- Fever remedies
- Galenical preparations
- Hormone preparations, except diagnostics
- Insulin preparations
- Intravenous solutions
- Iodine, tincture of
- Lip balms
- Lozenges, pharmaceutical
- Medicines, capsuled or ampuled
- Nitrofuran preparations
- Parenteral solutions
- Penicillin preparations
- Pills, pharmaceutical
- Pituitary gland pharmaceutical preparations
- Poultry and animal remedies
- Powders, pharmaceutical
- Procaine pharmaceutical preparations
- Proprietary drug products
- Remedies, human and animal
- Sodium chloride solution for injection, U.S.P.
- Sodium salicylate tablets
- Solutions, pharmaceutical
- Spirits, pharmaceutical
- Syrups, pharmaceutical
- Tablets, pharmaceutical
- Thyroid preparations
- Tinctures, pharmaceutical
- Tranquilizers and mental drug preparations
- Veterinary pharmaceutical preparations
- Vitamin preparations
- Water decontamination or purification tablets
- Water, sterile: for injections
- Zinc ointment
Description for 2835: In Vitro and In Vitro Diagnostic Substances
Division D: Manufacturing | Major Group 28: Chemicals And Allied Products | Industry Group 283: Drugs
2835 In Vitro and In Vitro Diagnostic Substances: Establishments primarily engaged in manufacturing in vitro and in vivo diagnostic substances, whether or not packaged for retail sale. These materials are chemical, biological, or radioactive substances used in diagnosing or monitoring the state of human or veterinary health by identifying and measuring normal or abnormal constituents of body fluids or tissues.
- Angiourographic diagnostic agents
- Barium diagnostic agents
- Blood derivative diagnostic reagents
- Clinical chemistry reagents (including toxicology)
- Clinical chemistry standards and controls (including toxicology)
- Coagulation diagnostic reagents
- Cold kits for labeling with technetium
- Contrast media diagnostic products (e.g., iodine and barium)
- Cytology and histology diagnostic products
- Diagnostic agents, biological
- Electrolyte diagnostic reagents
- Enzyme and isoenzyme diagnostic reagents
- Hematology diagnostic reagents
- In vitro diagnostics
- In vivo diagnostics
- In vivo radioactive reagents
- Iodinated diagnostic agents
- Metabolite diagnostic reagents
- Microbiology, virology, and serology diagnostic products
- Pregnancy test kits
- Radioactive diagnostic substances
- Technetium products
- Viral test diagnostic reagents
Description for 2836: Biological Products, Except Diagnostic Substances
2836 Biological Products, Except Diagnostic Substances: Establishments primarily engaged in the production of bacterial and virus vaccines, toxoids, and analogous products (such as allergenic extracts), serums, plasmas, and other blood derivatives for human or veterinary use, other than in vitro and in vivo diagnostic substances. Included in this industry are establishments primarily engaged in the production of microbiological products for other uses. Establishments primarily engaged in manufacturing in vitro and in vivo diagnostic substances are classified in Industry 2835.
- Agar culture media, except in vitro and in vivo
- Aggressins, except in vitro and in vivo
- Allergenic extracts, except in vitro and in vivo
- Anti-hog-cholera serums
- Bacterial vaccines
- Bacterins, except in vitro and in vivo
- Bacteriological media, except in vitro and in vivo
- Biological and allied products: antitoxins, bacterins, vaccines, viruses,
- Blood derivatives, for human or veterinary use, except in vitro and
- Coagulation products
- Culture media or concentrates, except in vitro and in vivo
- Diphtheria toxin
- Hematology products, except in vitro and in vivo reagents
- Pollen extracts, except in vitro and in vivo
- Serums, except in vitro and in vivo
- Toxoids except in vitro and in vivo
Pharmaceutical Manufacturers Insurance - The Bottom Line
Pharmaceutical manufacturers insurance policies can vary widely in coverage, costs and exclusions. To learn if your pharmaceutical manufacturing operation has the best fit insurance policies - talk to an experienced commercial insurance broker.
Often they are able to save you on premiums and offer you better policy options than you currently have.
Additional Resources For Manufacturing Insurance
Learn all about manufacturing insurance. Manufacturers face many unique risks such as product libility and/or product recall exposures due to the nature of their business operations.
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- Bottling Plants
- Brooms & Brushes
- Camping Equipment
- Canned Fruit & Vegetables
- Canvas Products
- CBD Oil And Hemp
- Clock & Watch
- Commercial Air Conditioning
- Commercial Electronics
- Communications Equipment
- Construction Equipment
- Cork Products
- Dairies & Creameries
- Down And Feather Products
- Dry Ice
- Dyes & Pigments
- Electronic Toys & Games
- Exercise Equipment
- Farm Equipment
- Feed & Grain
- Flavoring Extracts
- Frozen Foods
- Fruit Juice
- Fur Garment
- Garage Door
- Gypsum Products
- Ice Cream
- Industrial Equipment
- Iron & Steel Foundries
- Lawn Mowers
- Leather Apparel
- Leather Goods
- Lighting & Wiring
- Lumber & Wood Products
- Machine Shop
- Major Electrical Appliances
- Marijuana Products
- Mattresses & Box Springs
- Metal & Plastic Furniture
- Metal Heat Treating
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- Nonferrous Foundries
- Ornamental Metalwork
- Paper & Allied Products
- Pet Food
- Plastic & Rubber Toys
- Plastic Goods
- Plastics Molding, Forming & Extruding
- Product Liability
- Psychedelic Drugs
- Pulp & Paper Mills
- Residential Air Conditioning & Heating
- Rubber Goods
- Sawmills & Planing Mills
- Screw Machine Products
- Sheet Metal
- Soap & Detergent
- Small Electrical Appliances
- Sporting Goods
- Stone Products
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- Vegetable Juice
- Vending Machines
- Wire Rope
- Wood Furniture
- Writing Instruments
- Specialty Manufacturing
- Specialty Product Liability
The manufacturing industry is a vital part of the economy and plays a significant role in the production of goods and services. However, it is also an industry that is prone to risks and accidents, which can result in costly damages and lawsuits. Therefore, it is essential for businesses in the manufacturing industry to have insurance to protect them against potential losses.
Business insurance can cover a wide range of risks, including property damage, liability, and worker injuries. For instance, if a fire were to break out in a manufacturing facility and destroy equipment or inventory, commercial insurance could cover the costs of replacing or repairing the damages. Similarly, if a worker were to be injured on the job, business insurance could cover medical expenses and lost wages.
In addition to protecting against physical damages, insurance can also provide financial protection against legal liabilities. If a customer were to sue a manufacturing business for a faulty product, the commercial insurance could cover the costs of legal fees and settlements.
Overall, insurance is essential for the manufacturing industry as it helps to mitigate risks and protect against unexpected costs. Without it, businesses in the industry could face financial ruin in the event of an accident or lawsuit.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income with Extra Expense, Equipment Breakdown, Employee Dishonesty, Accounts Receivable, Computers, Goods in Transit, Valuable Papers and Records, General Liability, Employee Benefits Liability, Environmental Impairment Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.