LIFE SCIENCE PRODUCT SHORTAGE COVERAGE ENDORSEMENT This endorsement modifies insurance provided under the following: LIFE SCIENCES LIABILITY POLICY SCHEDULE Coverage Limit Of Insurance Deductible or Retention SUBPART 1 PRODUCT SHORTAGE LOSS LIABILITY $ aggregate $ per $ aggregate Initial Coverage Date Retroactive Date: SUBPART 2 SHORTAGE MANAGEMENT AND MEDICAL MONITORING EXPENSE Initial Coverage Date Retroactive Date: $ aggregate $ per $ aggregate Information required to complete this Schedule, if not shown above, will be shown in the Declarations or applicable endorsement. 1. SECTION I COVERAGE PART INSURING AGREEMENTS is amended by the addition of the following Coverage Part: LIFE SCIENCE PRODUCT SHORTAGE COVERAGE SUBPART 1 - PRODUCT SHORTAGE LOSS LIABILITY a. We will pay all damages that the insured becomes legally obligated to pay in excess of the deductible or retention stated above for product shortage loss caused by a product shortage. b. We will also pay all defense costs to defend a claim seeking such damages. c. This Coverage Part applies only if: (1) A claim for damages covered under this Coverage Subpart is first made against the insured during the policy period or, if applicable, the extended reporting period; and (2) The product shortage loss first takes place: on or after the retroactive date and before the end of the policy period. 2007 by Berkley Life Sciences, LLC, an affiliate of Gemini 1 Insurance Company and Nautilus Insurance Company. All GL COND 5012 0812 Page 1 of 6
SUBPART 2 SHORTAGE MANAGEMENT AND MEDICAL MONITORING EXPENSE a. We will pay shortage management expense and shortage medical monitoring expense in excess of the deductible or retention stated above directly incurred by or on behalf of the Named Insured in response to a product shortage provided that: (1) The product shortage is first reported by or on behalf of the Named Insured to the FDA during the policy period, and acknowledged by the FDA prior to payment of any expense under this Endorsement; (2) The product shortage is first reported to us within ten (10) days of the expiration of the policy period; and (3) The shortage management expense or shortage medical monitoring expense is incurred and reported to us after the inception date, but within one (1) year of the expiration, of the policy period. b. We will pay such expenses only if incurred with our prior consent, which consent shall not be unreasonably withheld, and where such expenses are not covered under any other part of this Policy. 2. SECTION III LIMITS OF INSURANCE is amended as follows: a. LIFE SCIENCE PRODUCT SHORTAGE COVERAGE as provided in this Endorsement is subject to: (1) The individual and aggregate limits for this Coverage as stated in the Schedule above; (2) The Products-Completed Operations Aggregate Limit; and (3) The Overall Policy Aggregate Limit, if any. b. The payment of associated defense costs under this Coverage Part shall count against and reduce the available Limits of Insurance applicable to this Coverage Part. c. In no event shall this Endorsement be construed as granting additional limits of insurance or increasing or reinstating the limits applicable to any Coverage Part or Subpart of this Policy. 3. SECTION IV EXCLUSIONS, is amended as follows: The following COMMON POLICY EXCLUSIONS do not apply to the coverages provided by this Endorsement: f. Biological Agents; g. Contractual liability but only to the following extent: This exclusion does not apply to liability for product shortage loss otherwise covered under this Endorsement, where such liability for loss of another person or organization (the indemnitee ) is assumed in an insured contract, provided that: i. The event causing the product shortage occurs after the execution of the insured contract; ii. The liability assumed pursuant to the insured contract is assumed solely to the extent and for the amounts required in the insured contract, and in no event for greater than the limits of insurance applicable to this Endorsement; and iii. The indemnitee is vicariously liable for your work or your product, and is not at fault, either in whole or in part. 2007 by Berkley Life Sciences, LLC, an affiliate of Gemini 2 Insurance Company and Nautilus Insurance Company. All GL COND 5012 0812 Page 2 of 6
k. Healthcare Services; m. Intentional, Fraudulent or Criminal Acts but only to the following extent: Subsection m.3. of this exclusion, regarding other acts intended by the insured to cause loss, does not apply to side effects caused by a product shortage. r. Pollution; or s. Recall of Products, Work or Impaired Property. The following exclusion is added to COMMON POLICY EXCLUSIONS, SECTION IV EXCLUSIONS: This insurance does not apply to product shortage loss, shortage management expense or shortage medical monitoring expense except to the extent coverage is provided by this Endorsement. The following exclusion applies solely to SUBPART 2 SHORTAGE MANAGEMENT AND MEDICAL MONITORING EXPENSE: This insurance does not apply to shortage management expense or shortage medical monitoring expense based upon or arising from a product shortage caused, in whole or in part, by an economic decision. 4. Solely as it applies to the coverage provided by this Endorsement, SECTION V CONDITIONS is amended by the addition of the following: a. It is a condition to coverage under this Endorsement for product shortage loss, shortage management expense or shortage medical monitoring expense arising out of a clinical trial that the Named Insured also must have purchased COVERAGE PART E CLINICAL TRIAL COVERAGE. b. If the Named Insured has purchased COVERAGE PART E CLINICAL TRIAL COVERAGE but has not purchased COVERAGE PART A PRODUCTS-COMPLETED OPERATIONS LIABILITY then this Endorsement only applies to product shortage loss, shortage management expense or shortage medical monitoring expense arising out of an approved clinical trial. 5. Solely as it applies to the coverage provided by this Endorsement, SECTION VI DEFINITIONS is amended as follows: a. The following definitions are added: (1) Dependent property means property operated by others whom you depend on to: (a) Deliver materials or services to you, or to others for your account (Contributing Locations), including but not limited to water supply services, power supply services and communication supply services (including services related to Internet access or access to any electronic network); (b) Accept your products or services (Recipient Locations); (c) Manufacture products for delivery to your customers under a contract of sale (Manufacturing Locations); or (d) Attract customers to your business (Leader Locations). 2007 by Berkley Life Sciences, LLC, an affiliate of Gemini 3 Insurance Company and Nautilus Insurance Company. All GL COND 5012 0812 Page 3 of 6
(2) Economic decision means a decision by, or with the approval of, the Named Insured to discontinue or reduce production or distribution of a product for any reason other than: (a) A decision by an insured to suspend or reduce production or distribution of a product because production or distribution at the same level, without correction, would likely result in a severe adverse event to a product user; (b) A suspension or delay in the manufacturing or distribution of a product because of an accident which takes place at: i. the insured s manufacturing or distribution facility; or ii. a dependent property; causing a necessary ingredient, component, raw material, finished product or packaging to become unavailable or to be rationed, or the insured s facility to shut down or operate at a reduced capacity, because of the accident; or (c) A request or directive by the FDA to suspend or reduce production or distribution of a product for a reason other than intentional non-compliance with the FDA; provided that the insured intends to resume such production or distribution at existing levels once the reason for the suspension or reduction in output has been addressed. (3) Emotional distress injury means mental anguish, shock or humiliation sustained by the product user in the absence of bodily injury. (4) FDA means the United States Food and Drug Administration or appropriate governmental authority having jurisdiction over the life science product. (5) Life science product means: (a) a drug, biologic, medical device, dietary supplement, cosmetic, cosmetic drug or medical food; or (b) an ingredient, material or product that is being tested in an approved clinical trial. (6) Product shortage means the unavailability of a life science product to a product user, or the availability of such product in a reduced amount because the product has been rationed with the knowledge of, but without objection by, the FDA. (7) Product shortage loss means: (a) bodily injury; (b) emotional distress injury; or (c) shortage medical monitoring expense. (8) Product user means a person who was using or promised the use of a life science product at the time of, or prior to, the product shortage, or who was otherwise unable to obtain the product because of a product shortage. (9) Shortage Management Expense means the following reasonable expenses where necessarily incurred by or on behalf of the Named Insured to respond to a product shortage which expenses would not have been incurred had the product shortage not have taken place: (a) Expenses necessarily incurred to prepare and issue communications regarding the product shortage (in whatever format is required by the FDA) 2007 by Berkley Life Sciences, LLC, an affiliate of Gemini 4 Insurance Company and Nautilus Insurance Company. All GL COND 5012 0812 Page 4 of 6
including but not limited to notices to or communications with direct accounts, the public or the appropriate regulatory authorities; (b) Fees paid following or in conjunction with a public announcement of a product shortage to public relations or other consultants to develop and implement a plan to minimize the financial impact of the product shortage to the insured; (c) Fees paid to law firms and consultants to challenge a governmental communication regarding the effect of the product shortage on the product user; and (d) Expenses incurred to investigate the current location, or cause of disappearance, of a stolen or counterfeited life science product which is the subject of a product shortage. (10) Shortage medical monitoring expense means reasonable expenses incurred to conduct medical testing on or medical monitoring of a product user unable to obtain a life science product, or the recommended therapeutic dose of such product, following a product shortage, where such expenses are medically warranted to improve the chance of beneficial medical intervention. (11) Stolen or counterfeited means the theft, counterfeiting or dilution of a life science product or its active ingredient, or in the case of a medical device, its key component, without the knowledge or permission of the insured. b. Paragraph 15. Critical Fact is modified by the addition of the following: (1) Subparagraphs 15.a. and b. apply to the coverages provided by this Endorsement. (2) The following critical facts are added: (a) A suspension or delay in the manufacturing or distribution of a life science product because of an accident which takes place at: the insured s manufacturing or distribution facility; or a dependent property; causing a necessary ingredient, component, raw material, finished product or packaging to become unavailable or to be rationed, or the insured s facility to shut down or operate at a reduced capacity, because of the accident. (b) Denial by the insured of a request by a product user for access to a life science product under the compassionate use exception or approved clinical trial criteria; (c) Discovery by the insured that your product has been stolen or counterfeited during the manufacturing or distribution of the product; (d) Discovery by the insured that your product has become either misbranded or adulterated (as those terms are defined by the FDA) during the manufacturing or distribution of the product; (e) The unavailability of a life science product to a product user; or (f) A decision by an insured, or the existence of other factors, likely to result in the unavailability of a life science product to a product user during the policy period. As used in (e) and (f) above, unavailability includes availability in a reduced amount because the product has been or will be rationed. 2007 by Berkley Life Sciences, LLC, an affiliate of Gemini 5 Insurance Company and Nautilus Insurance Company. All GL COND 5012 0812 Page 5 of 6
6. All other terms, conditions, exclusions and definitions set forth in this Policy shall otherwise apply to this Endorsement. 2007 by Berkley Life Sciences, LLC, an affiliate of Gemini 6 Insurance Company and Nautilus Insurance Company. All GL COND 5012 0812 Page 6 of 6