Presentation at the Q1 conference on 23 May about the new liability regime likely to be imposed under the new new EU Medical Devices Regulation and In Vitro Diagnostics Regulation.

1. [MANDATORY]
LIABILITY
INSURANCE
5th Annual European Device and
Diagnostic Regulation Conference
23 May 2016
Erik Vollebregt
www.axonadvocaten.nl

2. Between dream and reality stand
laws and practical considerations
• Ardent “nevermore” political wish in
response to PIP fraud to
• make patient recourse for damage
suffered from defective devices
easier
• provide deterrent to fraud /
negligence in quality of devices
• Drafting of manufacturer and AR liability
clauses sloppy and without consideration
to relation with existing EU and national
law on product liability for medical
devices
• No added value over existing product
liability regime
• Result of current MDR/IVDR language
will be ‘Confusion Everywhere’

3. Council position on manufacturer
liability
Article 8 (13) MDR / 8 (11) IVDR
• “compensation” – what exactly? Product Liability Directive is clear on
damage covered
• “caused by” – burden of proof? PLD puts burden of proof on claimant
• “in accordance with applicable Union and national law” – ergo in
accordance with PLD? What national laws?
• “shall consider” – so not mandatory? Need to document considerations?
Can this cause non-conformity?
• “appropriate insurance / guarantee ” – what is appropriate?
• “damage caused by” / “cost associated with” – different concepts; what is
covered: replacement/explantation, other (consequential) damage?
• “defective” – by what legal standard?

4. Manufacturer liability
• Relation to PLD completely unclear
• MDR and IVDR lex specialis or not?
• Does it amend PLD for medical devices only?)
although “in accordance with applicable Union and national law” – so,
in accordance PLD and national additional liability
• PLD excludes negligence test, national law may allow it
• Article 9 PLD: only (a) damage caused by death or by personal injuries;
and (b) damage to, or destruction of, any item of property other than the
defective product itself
• MDR / IVDR uses “damage caused by” / “cost associated with”
inconsistently and imprecisely

5. Council position on AR liability
Article 9 (4a)
• “Manufacturer has not complied with article 8 [General manufacturer
obligations]” – that is quite a list
• “legally liable” – what does that mean?
• “defective devices” – by what legal standard? Must defect be caused
by Article 8 non-compliance?
• “[liable] in accordance with Article 8 (13)” – does that mean the AR
shall “consider appropriate insurance”?

6. AR liability
• Unique in Goods Alignment Package – no other EU statute has AR
liability (not even toys and civil explosives)
• Does not fit in AR role as defined in Blue Guide
• Article 9 (4) excludes a number of Article 8 obligations from delegation to
AR
• e.g. Article 8 (1): ensuring that the devices ‘are designed and
manufactured in accordance with the requirements of this
Regulation’ – so AR responsibility for design and manufacturing
related defects excluded? PLD definition of defect basically only
covers those
Does not fit in PLD logic, which excludes liability for ‘producer’ (Art 7 (a)
and (c) if:
• he did not put the product into circulation; or
• the product was neither manufactured by him for sale or any form
of distribution for economic purpose nor manufactured or
distributed by him in the course of his business

7. AR liability
• Overlap ‘importer/producer’ PLD liability and AR MDR/IVDR liability will
cause parties to point to each other to detriment of patient
• ARs will become very triggerhappy for termination given that MDR/IVDR
make it mandatory to include in the mandate that AR terminates the
mandate if the manufacturer acts contrary to his obligations under this
Regulation (article 9 (3) (e) MDR)

8. Interface with Product Liability
Directive
• EU Court in Centre hospitalier universitaire de Besançon v Thomas
Dutrueux and Caisse primaire d’assurance maladie du Jura (C-495/10)
• national legislation and EU legislation in the field of liability for
defective products may be established but only on condition that it
does not adversely affect the producer’s liability as it is
established by the PLD
• Overlap between MDR/IVDR and PLD will cause gaming the system by
parties held liable, to detriment of patient (like in O’Byrne case (C-
127/04) re PLD statute of limitation)

9. Product batch liability for all
devices
• EU Court Joined Cases C-503/13 and C-504/13 Guidant: all devices in a
recalled batch are ‘defective’ under PLD, provided that
• they have a risk profile like pacemakers and ICDs (“abnormal
potential for damage” with patients in “particularly vulnerable
situation”)
• damage includes costs that patients incur to have devices
replaced in accordance with manufacturer FSCA (“all that is
necessary to eliminate harmful consequences and to restore the
level of safety which a person is entitled to expect”)
• MDR /IVDR “the costs associated with” proposal will likely extend
product batch liability to all devices, regardless of risk profile
• Manufacturers and ARs will think twice before issuing a recall
because application of precautionary principle in recall renders
device defect under PLD

10. Other EU developments in product
liability
• Ongoing discussions to harmonise collective redress one way or the
other
• Commission Recommendation 2013/396/EU on Common
Principles for Collective Redress Mechanisms aimed at ensuring
that collective redress mechanisms are available to assist in the
resolution of large numbers of similar claims
• To be implemented by Member States in 2015
• Commission to evaluate in 2017
• Potential notified body liability for defective products if placed on the
market as result of notified body negligence in relation to design and
surveillance?
• C-219/15 Elisabeth Schmitt v TÜV Rheinland LGA Products
GmbH (in early stage of EU Court preliminary reference
procedure)

11. Consequences
• Small companies run disproportionate risks
• Small manufacturers have additional product liability risks
• Small ARs will cease business
• ARs will terminate agreements at first suspicion of non-
compliance
• Interruptions of supply to market as a result of AR-manufacturer
conflicts / contract terminations
• Costs of liability (insurance) will be passed on and end up with patients
and healthcare systems
• Everyone will spend more time and money litigating as manufacturers,
ARs, patients, notified bodies and insurance companies fight about who
is liable

13. www.axonlawyers.com
THANKS FOR YOUR ATTENTION
Erik Vollebregt
Axon Lawyers
Piet Heinkade 183
1019 HC Amsterdam
T +31 88 650 6500
M +31 6 47 180 683
E erik.vollebregt@axonlawyers.com
@meddevlegal
B http://medicaldeviceslegal.com
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