"Insuring" the continued solvency of pharmaceutical companies in the face of product liability class actions

Costly product liability lawsuits continue to plague the pharmaceutical industry, and insurance to cover these losses is severely inadequate. Furthermore, questionable regulation of drugs exists once a pharmaceutical has passed FDA approval. This article describes a plan that uses a capitalistic, rather than a governmental, approach to solve both the insurance and the quality control problems. Although the proposed plan has never been used to insure pharmaceutical companies, different permutations of it have been used to insure other litigation-prone industries. Success from the proposed insurance entity results from the combined knowledge of scientists and actuaries to provide both protection from product liability lawsuits for the pharmaceutical industry and enhanced post-market surveillance of pharmaceuticals.