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Cell and Gene Therapies: An Overview of the Liability Risks

Av Alexander Klatt
Senior Underwriter Pharma Life Science

ATMPs stand for innovation and progress in medicine. However, ATMPs also entail particular liability risks due to their particular complexity and their preparation processes.

What initially sounds like science fiction is increasingly becoming reality: Immune cells (more precisely: "T cells") are taken from cancer patients and genetically modified outside their body in biotechnological methods in such a way that these immune cells can specifically recognise and combat the specific cancer cells after their administration to the patients as medicine. Or: In people with rare, incurable hereditary diseases, one or more genes that do not function properly are removed or replaced by targeted genome editing ("genome surgery") to cure the corresponding diseases (this method is currently still undergoing clinical studies in part).

These ground-breaking treatments, often the only hope for those affected, are called "Advanced Therapy Medical Products" or "ATMPs". ATMPs are medicines based on genes, tissues or cells. They are part of personalised medicine, since the medicines are individually tailored to the individual patients and their diseases. Research and development of ATMPs is extremely costly for pharmaceutical companies. There is also a considerable risk of failure. However, there is considerable economic potential if pharmaceutical companies succeed in getting these products through the strict and lengthy approval procedures. Therefore, more and more pharmaceutical and biotech companies are betting on the future of ATMP and are pushing into the rapidly growing market of ATMPs with their own R&D, collaborations or corporate acquisitions.

Analysts estimate the growth of the global ATMP market to be approx. 30 billion euros by 2026. Some of these drugs have the potential to become a blockbuster drug, generating annual sales of more than one billion euros. According to estimates by experts in the EU, the total amount of active substances produced in biotechnology (biologics or biologicals), which include ATMPs, now accounts for approx. 34% of the total expenditure on medicines. This amounted to EUR 78.6 billion in 2021. Worldwide, the market for biologicals is expected to reach 420.55 billion US dollars in 2025.

However, due to the particular complexity of biologicals, especially ATMPs, and their manufacturing processes, the biotech boom also entails special liability risks not only for the pharmaceutical companies, but also, in principle, for all stakeholders involved in the entire production and supply chain. These are to be examined in more detail below.

What are ATMPs?

ATMPs are medicines and are therefore regulated as such: In simple terms, medicinal products are substances or preparations of substances intended for use in or on the human body for the treatment, prophylaxis or diagnosis of diseases. In contrast to medical devices (e.g. adhesive plasters, pacemakers) that have a primary physical effect, drugs primarily develop their physiological effects on the body, primarily pharmacologically, immunologically or metabolically.

In addition, depending on the way in which active substances are produced that are contained in medicinal products, medicinal products may be divided into synthetic or biological (biologicals) medicinal products: Synthetic pharmaceuticals are produced in chemical processes and usually contain only one chemical substance or a combination of a few chemical compounds as active ingredient. Synthetic drugs include the well-known painkiller Aspirin®, for example. Biologicals, which also include ATMPs, are produced in complex biotechnological processes in living organisms such as bacteria, fungi or cells. Such biological agents are substances with an extremely complex structure. Examples of biologicals are, for example, hormones (e.g. insulin), vaccines, recombinant active agents, monoclonal antibodies as well as cell and gene therapy medicines.

The ATMPs are therefore a special type of biologicals and can be divided into three categories:

  • Gene therapy medicines: These are drugs whose active substances contain or consist of DNA or RNA (carriers of genetic information) that can specifically regulate, repair, replace, add or remove defective genes in patients (e.g., CRISPR/Cas9 or "gene scissors").
  • Somatic cell therapy medicines: These are drugs consisting of cells or tissues whose biological properties or physiological functions have been substantially modified (e.g., CAR-T cell therapy).
  • Tissue-engineered medicines: These are drugs that contain or consist of biotechnologically processed cells or tissues and are intended for the regeneration, recovery or replacement of human tissue (e.g., stem cell therapy medicine).
  • One of the special advantages of ATMPs is that they are individually tailored to patients and the specific characteristics of their disease (e.g. the genetic fingerprint of a tumour).

Currently, ten gene therapy medicines, one cell therapy medicine and two tissue-engineered medicines are approved in the EU. Research and the number of studies in the field of ATMPs are increasing rapidly. Nearly 3,000 studies have already been carried out worldwide or are still ongoing. Most recently, Germany ranked fourth in the world behind the United States, the United Kingdom and China. Starting from 2025, 10-20 ATMPs approved by the European Medicines Agency ("EMA") and/or the US Food and Drug Administration ("FDA") will be added annually.

Strict investigation and approval procedures

The research and development of ATMPs is extremely demanding and poses not only special scientific, biotechnological and clinical challenges for pharmaceutical companies. The legal requirements for the production, testing, approval and marketing of ATMPs are also particularly high. For example, cell and gene therapeutics at EU level are subject to the special EU regulation for ATMPs (1394/2007/EC), which establishes a strict legal framework for the authorisation, monitoring and market surveillance of ATMPs throughout Europe.

As a matter of principle, ATMPs – like all new medicines to be licensed in Germany and the EU – undergo rigorous testing and approval procedures. However, the requirements for ATMPs are particularly high. The pharmaceutical company must present the necessary scientific evidence with regard to health benefits and risks, in particular efficacy, safety and pharmaceutical quality, through extensive clinical studies (phases I to III).

If ATMPs contain human cells or tissues which are not obtained as an autologous transplant, i.e. for transfer back to the same person, within the same surgical procedure but are obtained from another person, the donation, procurement and testing of the cells or tissue is governed by a specific European directive (2004/23/EC).

Enormous economic potential

ATMPs not only have tremendous potential to save lives, but also have significant economic potential for pharmaceutical companies. According to a US manufacturer, a specific gene therapy for the one-off treatment of a rare (hereditary) eye disease costs approx. 350,000 euros – per eye. But this is far from the top of the high-priced ATMPs. For another gene therapy approved for the treatment of the hereditary blood disease thalassemia, among others in the EU, the cost is approx. 1.5 million euros per treatment. The price for the most expensive ATMP approved in the USA to date is even approx. 2 million US dollars.

The costs of cell and gene therapies can thus also become a financial social and ethical challenge for healthcare systems worldwide and are therefore also the subject of controversial discussions. As a result, some pharmaceutical companies are developing innovative pricing models for their ATMPs. For example, some companies, especially in the USA, offer health insurance companies alternative payment models for their high-priced ATMPs, which are based on the success of the ATMP treatment ("Pay for Outcome").

What are the liability risks?

ATMPs undoubtedly stand for innovation and progress in medicine. Due to their complexity and the particular scientific, clinical and biotechnological challenges in the context of their research, development and production, ATMPs also bring with them new and until now largely unclarified regulatory and liability law issues.

For example, the scope of application of the strict pharmaceutical legislation requirements for the production of active substances can involve downstream procedures in the case of ATMPs. The removal of tumour tissue and other biological materials in cancer patients by the attending physician, which is the basis for the production of a personalised tumour vaccine (cell therapy) for this patient, can already fall within the strictly regulated area of drug production. This can result in increasing liability exposure.

While the doctor and/or the hospital are generally liable for the correct diagnosis and subsequent selection of the appropriate drug for the patient, in such cases – especially in the case of treatment with ATMPs – liability of the pharmaceutical company is also possible in principle. In principle, the person who places a medicinal product on the market under his name (pharmaceutical company) must be responsible for the safety and quality of the medicinal product. In addition to the pharmaceutical company, the manufacturer, the suppliers of biotechnological "ingredients" and technologies, the wholesaler or the pharmacies might also be liable in individual cases for the violation of individual duties of care and marketing.

Possible liability risks can arise in particular from development, manufacturing and/or instruction errors. In principle, it is the responsibility of the pharmaceutical company to prove that the adverse effects of the medicinal product do not have their origin in the field of development and manufacture.

A developmental or manufacturing defect may be present in ATMPs when adverse effects occur that go beyond what is reasonable according to the findings of medical science and are caused by the development or manufacture. On the other hand, this might be ruled out if the adverse effects are due to circumstances which have occurred only after the medicinal product has been placed on the market. As with all medicines, ATMPs also have virtually no active ingredients without side effects and these must be tolerated if the medicinal product is of sufficient benefit. These must be duly indicated in the package leaflet and the summary of product characteristics. Patients usually also accept serious side effects the more serious their disease is, the more inadequate the available treatment alternatives are and the higher the probability of successful therapy with a novel active substance. These prerequisites are almost always present, particularly in the case of ATMPs, which are normally used for life-threatening diseases, promise high efficacy and often represent the only hope for those affected.

In the area of errors in instructions, incorrect or insufficient information provided by the pharmaceutical company in the relevant technical and usage information can result in liability. The information in the technical and usage information must be based on the current state of medical knowledge when a specific batch of a drug is placed on the market. However, the benefits and risks may vary from patient to patient, since ATMPs are usually personalised medicines. This can sometimes become critical in terms of liability for the pharmaceutical manufacturer if this leads to the benefits and risks of the respective ATMP not being correctly recorded in the package leaflet or product information.

Another liability risk for pharmaceutical companies, manufacturers, suppliers and wholesalers may be pharmacovigilance, i.e. the obligation to monitor the safety of ATMPs on an ongoing and systematic basis after their introduction into the market. ATMPs can often have different, new and higher risks than conventional medicines. Therefore, the requirements for continuous monitoring of ATMPs are particularly high, especially with regard to complications. If there are indications of previously unknown side effects and interactions or other new findings or information regarding health hazards relating to the ATMPs, the parties concerned must take appropriate measures. As a result, non-compliance with warning and recall obligations can create a liability risk.

The German Medicinal Products Act ("AMG") provides in § 88 for a high maximum liability of EUR 120 million in the event of the death or injury of several people from the same drug. Partnership with a liability insurance company specialised in these topics is required to counter these possible liability risks effectively.


ATMPs – and biologicals in general – have brought about a radical shift in the life sciences sector toward personalised medicine, with their enormous potential to alleviate or even cure serious diseases.

It is therefore not surprising that the EU Commission has set itself the objective of creating regulatory frameworks for ATMPs in addition to the ATMP Action Plan, which is intended to promote the development and approval of ATMPs, with the adoption of the EU Pharma Strategy Plan (Pharmaceutical Strategy for Europe) by all Member States on 25 November 2020 to facilitate access to ATMPs for all European patients. The aim is to further strengthen Europe's position as a major player in ATMPs and to maintain Europe's global competitiveness in ATMP development.

Increased private and governmental biotech investment and research, development and production activities in the EU, especially in the field of ATMPs and biologicals, are therefore to be expected in the future. For the pharmaceutical industry, this means not only the prospect of being able to help affected patients and enormous economic potential, but also special liability risks.

Despite all the benefits that ATMPs offer both patients and pharmaceutical companies, the risks and liability issues associated with ATMPs require a concrete analysis of potential pitfalls and appropriate protection on an individual basis. To ensure the best possible insurance coverage, we recommend detailed consultation with an insurer specialised in these matters.