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By Alexander Das
Life science underwriting specialist

The medical device manufacturing industry has until 26th May 2020 to adopt the latest European Medical Device Regulation (Regulation (EU) 2017/745), bringing improvements to public confidence and in all likelihood changing the way related product liability litigation is presented and handled. 

There’s no question that medical devices are an integral part of modern medicine. From simple bandages to complex implantable defibrillators and stents, they are crucial to the diagnosis, treatment and prevention of disease. But despite their importance to health, the current Medical Device Directives have struggled to keep up with technological developments over the past 25 years.

In this article we look at the impact the Medical Devices Regulation (MDR) will have on patients, manufacturers and litigation, and explore why insurers hope organisations will embark on the new regulatory path sooner rather than later.

The need for greater transparency and stricter regulations became increasingly evident after several disputes were reported regarding leaky silicone breast implants made by French company Poly Implant Prosthèse (PIP) and safety problems with metal-on-metal (MoM) hip replacement implants. Both issues severely damaged the confidence of patients and physicians regarding the safety of such devices and highlighted the need for a major upgrade of the existing guidelines.
For patients

Five years in the making, the new Medical Device Directive officially came into force on 25th May 2017. The regulations it contains are much stricter than those of the previous version and have been designed first and foremost for the benefit of patients.

From now on, explains Peter Rudd-Clarke, a Senior Associate in the Medical/Life Sciences team at law firm Reynolds Porter Chamberlain, “When a new product comes to market, it will be subject to greater scrutiny. Then once the product is on the market, the manufacturer will have to continue vigilance to ensure that it remains safe”. The hurdles a product must clear to demonstrate its safety closely follow what already happens in the pharmaceutical industry. They involve rigorous pre-market scrutiny, including testing and clinical trials, as well as continued post-market vigilance to track how the product is performing.

Patients are further protected because the list of devices covered by the new MDR has been expanded to include some which, while not strictly medical, require similar safeguards. These include, for example, devices for aesthetic purposes, such as breast implants and coloured contact lenses, which will have to show that they conform to the same safety standards as their medical counterparts before being introduced to the market.

This extended list of devices will also appear on a new version of the existing Eudamed database, offering increased access to parties including the public, medical institutions and the press, allowing them to investigate, assess and finally make informed decisions about healthcare. “This database is all about transparency,” says Rudd-Clarke. “Once the manufacturer has collected data, it can be included in the database. And if it has information that calls into question the safety of the product, there’s a threshold for the manufacturer to take corrective action. From an insurance perspective, that’s good news. The manufacturer will know they have to act quickly if they are getting information from the field that questions the safety of the device, thus protecting patients as well as helping to reduce the potential liability on the manufacturer.”

For the public, this database is an effective way to avoid panic if there is a problem with a device. For example, when issues with hip-replacement implants started coming to light, it would have been easier for patients if they had the opportunity to check whether their own device was one of those affected. In this case, it was actually only metal-on-metal implants from a few manufacturers that were officially recalled and subject to regulatory action, but the litigation attracted widespread attention simply because patients became worried after reading about it in the media.

From now on, patients who receive an implant will be given a registration card allowing them access to information about the manufacturer and safety records. The hope is that concerned patients will find they don’t have to worry and won’t start litigation procedures.

Changes in litigation

If it does come to litigation, the new MDR is a win-win for both manufacturer and insurer, because mounting a defence will be much easier as a consequence of the many documented safety procedures followed before and after the product was introduced to the market.

At the moment, in cases of a claim, manufacturers need to prove retrospectively that their product is safe, which can be laborious, time-consuming and expensive. Under the new regime, however, a greater obligation to gather evidence from clinical trials means all the safety information is already available and can be deployed at an early stage.
“The manufacturer has already carried out trials demonstrating that the allegations don’t have any substance to them. This means that litigation is possible, but it can be nipped in the bud sooner,” says Rudd-Clarke. “This is good news from the insurer’s point of view and if there is a litigation, the defence will be much more frontloaded.”

It’s also likely that cases of multiple claims against several manufacturers will eventually fade away because, thanks to Eudamed, patients will be able to pinpoint the manufacturer responsible for their device. This way, it will be possible to have a targeted litigation against a particular manufacturer, rather than not knowing who the manufacturer is and bringing claims against several companies. There will not be that kind of multi-defendant action any more; it’s going to be a single claim against a single supplier or manufacturer.”

On the other hand, this ability to trace medical devices back to their manufacturer means a higher exposure for medical device companies brought about by the new MDR. A manufacturer will have to assess their key exposures, one of which will be rectification costs if devices are found faulty and cause injuries to patients. This will most likely result in an increase in requests for product recall insurance, which encompasses costs associated with reimplantation and surgical costs.

Only time will tell if the number of litigation cases falls, but experts believe the new MDR will at least change the type of action brought against manufacturers. Cases of defective products, thus far in the majority, will be much harder to prove “because the device has gone through years of testing, vigilance and post-marketing, with thousands of patient records taken,” says Rudd-Clarke. In contrast, failure to warn – namely in the form of side-effects or inadequate instructions for use – has the potential to increase.

There is already some evidence for this shift, with the courts now accepting approval by the regulator as proof of safety. Last year, Wilkes vs DePuy became a landmark case in this field when the judge found in favour of hip-replacement manufacturer DePuy, even after the claimant suffered a fracture three years following the initial operation. With the new MDR, this argument gains further strength.


Sooner rather than later

Insurers will be keen to advise their clients to transfer to the new medical regulation promptly. During the three-year transition period – expiring in 2020 – it is possible to continue as before, however the wisest option would be to embark on the new regulatory path as soon as possible. Such a step not only avoids having products that do not comply with the new MDR but, above all, it improves safety standards in the field. “Insurers will be saying to their clients that it makes products safer, and complying with it now is probably the best option,” concludes Rudd-Clarke.

Insurers welcome the latest MDR. As medical device companies start to follow the new regulations, products coming to market are inherently safer than they’re ever been in the past. This could potentially impact the level of claims although that will be borne out over time and insurers will be keeping a close eye on how the loss profile of the industry develops over the next few years.

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