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Impact of the new EU product liability framework on medical technology

Impact of the new EU product liability framework on medical technology


Ed Turtle and Anushi Amin, colleagues at law firm Cooley, analyze the new Product Liability Directive, which comes into force in 2024 and applies from 2026.

On 25 January 2024, the EU published an interim agreement text for the new Product Liability Directive (New PLD). This reform is the biggest change to EU product liability regulation in more than 40 years and is expected to have a significant impact on the medical technology industry. Here are five of the biggest changes.

1. More medical technology products will be the subject of claims

The definition of a product in the new PLD has expanded beyond hardware to include software, including standalone software such as software as a medical device (SaMD) and embedded software.

2. Make it easier for claimants to prove defects

The EU's existing Product Liability Directive (85/374/EEC) already intentionally excludes the claimant from liability, as liability is strict and the claimant does not have to show that the producer was at fault for any damage. It is friendly to people. As a result, legal tests to establish that a product is defective are typically the biggest hurdle for claimants.

The EU has rewritten the new PLD test to introduce alternative criteria for products to be considered defective. This means that the product does not provide the safety required under EU or national law or, in other words, violates EU regulations. Product safety regulations.

Furthermore, to reduce the burden on claimants of having to prove a defect, two situations in which a defect is presumed have been introduced.

(1) does not comply with relevant EU product safety regulations; This means that it is both part of the legal test for defects and the basis for assuming defects, ensuring regulatory compliance to reduce product liability risks for medical technology manufacturers. That becomes important.

(2) the product is scientifically or technically complex; Examples include medical devices and products using AI. Medical technology products are particularly at risk of being subject to this presumption.

3. Expanding the concept of defects

The concept of flaws will be expanded to include cybersecurity vulnerabilities, flawed software updates, AI and machine learning issues, and more. Lack of software updates also causes defects, placing a heavy burden on manufacturers to actively monitor for potential defects and vulnerabilities.

4. Expanding the scope of claims for damages

The new PLD revised the definition of harm to include medically recognized harm to psychological health. There are concerns about how widespread this will be and, for example, whether anxiety can be alleviated. Destruction or corruption of data is also within the scope. At the same time, the reform also removes the minimum and maximum limits for compensation claims.

The impact of these changes, especially when combined with the EU's new class action mechanism (applicable since June last year), increases the risk of mass product liability claims. Removal of minimum thresholds can result in relatively minor data issues, such as cybersecurity incidents or bugs in software updates applied to medical technology products.

5. Extension of billing period

The new PLD extends the period within which a claim can be made if the onset of symptoms is late (the so-called longstop) from 10 to 25 years. This change specifically targets potential damages in medical device and pharmaceutical claims. Extended claims periods lengthen medical technology companies' liability coverage and increase the cost and complexity of insurance coverage. It is important for stakeholders to assess their existing insurance coverage before the new regime comes into effect in 2026.

next step

The new PLD articles will be formally approved before being published in the Official Journal of the European Union and will enter into force 20 days later. This is expected to be completed within the next few months. A 24-month transition period will then begin. Medical technology stakeholders can use this transition period to consider how new PLDs will impact their business, including regulatory compliance, documentation, and insurance procedures, before the new rules begin to take effect in early 2026. It is important.

Written by Ed Turtle and Anushi Amin

February 28, 2024





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