In the United States, when a drug or medical device company conducts its human clinical trials at a government-owned facility, it may be stepping back in time where indemnification is concerned. This is because state or federal medical facilities fall under varying degrees of sovereign immunity, which protects the sovereign rights of the facility by limiting its liability.
Sovereign immunity is a carryover from English law that held that “the king can do no wrong” and, therefore, cannot be sued for negligence. It can be found in the Eleventh Amendment to the U.S. Constitution, which allows the federal and state government to assert sovereign immunity as a defense against any liability claims.
How Sovereign Immunity Affects Liability
Sovereign immunity can result in serious and unintended transfer of risk back to the sponsor.
In locales where sovereign immunity is in full force, government-backed facilities may be unable to agree to indemnification or insurance requirements. Worse, such facilities might agree to contract terms but add language that preserves the right to claim any “exemptions, privileges and immunities as may be provided by law” when presented with a claim.
Sovereign immunity rights have been challenged over the years, so their application now varies from state to state. It is important for drug sponsors to know and understand the sovereign immunity statutes in every state in which they are conducting clinical trials if the trial site is a state or federally operated institution that can claim sovereign immunity.