TL;DR
A CDMO sponsor MSA insurance section typically demands $5M to $10M products liability, additional-insured for products and completed operations, primary and non-contributory wording, waiver of subrogation, and 30-day notice of cancellation. Most existing CDMO programs satisfy 30 to 60 percent of that schedule on a strict reading. We rebuild the program from the base form up, with the same coverages but a different architecture, and produce a Certificate of Insurance the sponsor accepts on first read.
Pharmaceutical & Medical Device CDMOs · Texas
Most CDMOs receive their first $5M products liability requirement, additional insured for products and completed operations, primary and non-contributory wording, waiver of subrogation, and a 30-day notice of cancellation provision - all in a single MSA section - and discover they have to rebuild their program from a base form designed for general light manufacturing.
We specialize in that rebuild. Read the specifics below, or run the MSA Decoder to map your sponsor's specific clauses against the gaps.
Below: 4 specific MSA gap categories CDMOs hit most - architecture, AI/COI, indemnity, renewal lapse.
Problem 01 · Coverage architecture
Most CDMOs were placed by an agent who treated the company like any other manufacturer: Texas-domiciled, under 100 employees, packaged in a BOP or middle-market manufacturers package. The base form is wrong.
Pharmaceutical and medical device contract manufacturing requires an account-specific products liability rating, a recall extension or standalone recall policy, cargo/warehouseman's legal liability for sponsor-owned API and finished product on premises, and - increasingly - a cyber program built around drug master file data and PHI handling.
We rebuild from the base form up. Same coverages, different architecture.
Problem 02 · MSA compliance
Modern insurance policies do not include carrier-issued notice to certificate holders by default. The "endeavor to provide notice" disclaimer on most COIs technically does not satisfy a 30-day notice of cancellation clause. Some sponsors enforce this. Most do not - until they do.
Similarly, a blanket additional insured endorsement that covers ongoing operations but excludes products/completed operations is not compliant for a contract manufacturer, even though the COI shows AI status. We audit COIs against the actual MSA language, not against a generic checklist.
Problem 03 · Indemnity exposure
Sponsor MSAs increasingly include one-way indemnity clauses where the manufacturer indemnifies the sponsor for any claim arising out of the manufacturer's services - without a cap, without carve-outs for sponsor-supplied materials, sponsor specifications, or sponsor-directed manufacturing changes.
A claim that exceeds the insurance limit becomes a direct claim against company equity. We work with you (and your counsel) to push for: mutual indemnity, a cap aligned to insurance limits, and carve-outs for sponsor-controlled inputs. None of these are exotic asks. All are negotiable.
Problem 04 · Renewal lapse risk
A COI that lapsed because nobody on the manufacturer's side flagged a renewal date triggered an automatic stop-work clause in a sponsor MSA, and the sponsor moved a $4M campaign to a different facility. We have read the post-mortem.
We build a sponsor-by-sponsor compliance ledger. Each MSA gets logged against required coverages, endorsements, limits, and notice provisions. Renewal certificates issue automatically, 60 days before policy expiration, to every sponsor on file.
Carrier access
Generalist carriers will write a CDMO and price it as a standard manufacturer. The placement looks fine on the COI. The placement falls apart at first claim, when it turns out the products endorsement excluded recalls, or the cargo coverage capped at $250K against $3M of sponsor materials on the floor.
Our placements run through carriers with dedicated life sciences underwriting and, where appropriate, surplus-lines specialty markets accessed through a wholesale partner. We know which markets will write injectable vs. oral solid dose, which will accept controlled-substance handling, which will quote a Texas non-subscriber with a credible safety story, and which will not.
Most of our CDMO clients sit in the Texas and DFW manufacturing clusters; we also place programs for sponsors and CMOs in the New Jersey and North Carolina (RTP) corridors.
CDMOs frequently sit alongside other life-sciences specialty placements in the same operator's broader program - including laboratory insurance for in-house QC labs, biotech directors and officers insurance for sponsor-side coordination, and clinical trial insurance where the CDMO partners on sponsor trial supply. The MSA Decoder workflow integrates across these lines.
Pricing
Premium ranges by coverage type, the factors that drive cost, and three sample programs for Texas CDMOs.
Frequently asked
Additional insured status for products and completed operations. Most CGL policies provide blanket additional insured for ongoing operations but exclude products/completed ops from that endorsement. For a contract manufacturer, products is the entire point - so the gap matters. The fix is usually an ISO CG 20 37 endorsement or a manuscripted blanket equivalent.
For a CDMO in the $10M to $50M revenue range manufacturing oral solid dose or topical products, a $5M products liability tower (typically $1M primary + $4M umbrella) generally runs $35,000 to $90,000 per year. Higher-risk categories (sterile injectables, biologics, oncology) start at $80,000 and can exceed $250,000.
It means the sponsor is named on your CGL policy as an additional insured, and that additional-insured status applies to claims arising from your finished products after they leave your facility. This is materially different from ongoing-operations AI, which most generic blanket endorsements provide.
Usually no. Sponsors typically place clinical trial liability for the trials they run, with you as additional insured. The exception is when an MSA pushes the obligation onto you - uncommon but read the indemnity and insurance sections carefully.
Endorsement-level fixes (additional insured, waiver of subrogation, primary/non-contributory) typically take 5 to 10 business days through an existing carrier. Adding limits or rebuilding architecture is a 30-to-60-day underwriting process and usually waits for renewal.
For Texas CDMOs in the $5M-$200M revenue range, the dedicated life-sciences markets - three or four nationally-recognized specialty insurers - have both the appetite and the form depth to write a compliant program. Larger global carriers also play in the segment, typically at higher revenue tiers, alongside London-market layers for specialty risks.
Primary/non-contributory means your policy pays first and does not seek contribution from the sponsor's policies. Sponsors require it because they do not want their carrier dragged into a claim that originated with your manufacturing process. Most CGL policies can add this via endorsement at minimal cost.
Next steps
Paste 3 customer indemnity clauses. Get a verdict on the risk transfer architecture - mutual, one-way capped, or one-way uncapped.
OpenFive recall coverage structures ranked by sponsor MSA fit. First-party dedicated, products sublimit (and why it fails), captive-supported.
OpenOne-way indemnity is the norm in sponsor MSAs, and most require coverages absent from the current COI. The recurring gaps we see.
OpenFive indemnity architectures ranked by operator favorability. Mutual capped, mutual with carve-outs, one-way with sponsor carve-outs.
OpenAuthoritative references
The base cGMP regulation governing manufacture, processing, packing, and holding of drugs.
Specific cGMP requirements for finished pharmaceuticals - the standard sponsor MSAs reference.
The internationally harmonized GMP standard for APIs - cited in sponsor MSAs for API CDMOs.
DMF confidentiality drives the cyber exposure inside CDMO sponsor relationships.
Parenteral Drug Association technical standards routinely cited in sterile-fill MSAs.
Why operators choose this practice
Every placement passes through specialty life-sciences underwriters - not a general manufacturer or healthcare desk.
Programs placed nationally with deep practice content for the 16 states anchoring the major US life-sciences clusters.
Coverage review requests come back the same business day. MSA reads are typically half an hour or less.
Free MSA Decoder, 49-clause glossary, 60+ Q&A library. Designed for CFOs, GCs, and Quality leaders.
Related deep-dives
Free MSA review
Send your sponsor MSA, GPO supplier agreement, hospital purchase contract, or your current COI - whatever you have. A specialist returns a clause-by-clause review within one business day.