Medical Devices & Consumer Health Products 2021

Last Updated August 31, 2021

Ireland

Trends and Developments


Authors



Kennedys is a global law firm with expertise in dispute resolution and advisory services, employing over 2,300 people in 24 countries around the world. The firm handles both contentious and non-contentious matters and provides a range of specialist legal services, including corporate and commercial advice, but with a particular focus on defending insurance and liability claims. Kennedys’ Dublin office has one of the largest dedicated insurance practices in Ireland and combines legal and regulatory expertise with practical business advice. Its specialist legal services span the insurance and reinsurance, healthcare and commercial dispute sectors. The firm's Dublin healthcare team advises hospitals, their insurers and healthcare professionals on contentious and non-contentious healthcare legal issues, including medical malpractice litigation, inquests, health law advice and regulatory matters.

Medical Devices Regulation and In Vitro Diagnostics Regulation

Regulation (EU) 2017/745 on medical devices (MDR) and Regulation (EU) 2017/746 on in vitro diagnostics (IVDR) are in the midst of substantiating the regulatory framework for consumer medical devices throughout the European Union. The MDR entered into full force on 26 May 2021, whilst the IVDR is set to become fully applicable in May 2022.   

The Regulations provide for an extension of market actors’ regulatory duties, which may lead to a trend of widening civil law liability for such actors in regard to patients and medical device users. The term “medical device” generally refers to all products and devices used in healthcare for the diagnosis, prevention, monitoring or treatment of a disease, injury or disability and which does not achieve its principal intended action by pharmacological, immunological or metabolic means, but rather by physical means. 

The Regulations provide for a substantial increase in the impact of the regulatory framework, with greater clarity on risk classifications, increased access to information and also detailed vigilance reporting being brought to the fore. 

Manufacturers will be obliged to carry out a “conformity assessment” to satisfy that the medical device intended for use satisfies the technical and safety standards set out by the Regulations. Manufacturers are obliged to have quality management systems in place which must include a strategy for regulatory compliance, risk management, performance evaluation, processes for the reporting of serious incidents and field safety corrective actions and processes for the monitoring and measurement of output, data analysis and product improvement. The new Regulations also provide improved pre-market assessment of high-risk devices, with an independent expert panel operating on behalf of the European regulatory system, who can also provide advice to manufacturers on the requirements of the device at an early stage of the product development process.

Manufacturers must also have available within their organisation at least one person responsible for regulatory compliance who possesses the requisite expertise in the field of medical devices. For each device, manufacturers must establish, implement, maintain and update a post-market surveillance system in a manner that is proportionate to the risk class and the type of device. The surveillance system should enable manufacturers to monitor the quality, performance and safety of a device throughout its lifetime.   

Manufacturers must also put measures in place to provide for sufficient financial coverage to meet potential product liability claims which may arise under the Product Liability Directive. Similar obligations are now also imposed on importers and distributors. Both importers and distributors must establish that devices have been CE marked in order to place a device on the market. Importers must equally ensure that the manufacturer or its authorised representative is identified. Distributors must ensure manufacturers have supplied information along with the relevant device, such information to pertain to the identity of the manufacturer and any safety and performance information relevant to users or any other persons, as appropriate. Such information may appear on the device itself, on the packaging or in the instructions for use. This information must also be made available on the manufacturer’s website (if it has one) and be kept up to date.   

The MDR is broader in scope and includes more products which were previously not regulated as medical devices (such as implantable devices for aesthetic and cosmetic purposes).

It is to be anticipated that this substantiation of the regulatory and compliance framework, including the broader scope of the Regulations, will create an increased risk of litigation, especially for manufacturers, as the new regime is far more prescriptive than the old. This may lead to increased litigation for defective devices. Under both Regulations, natural or legal persons may claim compensation for damage caused by a defective device. If the manufacturer of a device is not established in an EU member state and has not complied with its obligations under the Regulations, its authorised representative (which is defined as a person/company established in the EU who has received and accepted a written mandate from a non-EU based manufacturer to act on the manufacturer’s behalf in relation to specific tasks with regard to the manufacturer’s obligations under the Regulations) in the EU is legally liable on the same basis as, and jointly and severally with, the manufacturer (Article 11(5) MDR and IVDR).

On 20 May 2021, the Paris Court of Appeal ruled that TUV Rheinland (TUV), a German cosmetic surgery certification agency, was found to be negligent in awarding safety certificates to a French company, Poly Implant Prothese (PIP), which had produced defective breast implants between 2000 and 2010. In 2010, it was revealed that PIP had been filling its implants with inferior industrial silicone not authorised for human use, instead of medical silicone. The Paris court ruled that TUV was liable for the injuries the implants had caused. The ruling is expected to have implications for tens of thousands more women from dozens of countries around the world who received PIP implants, including Ireland where there are an estimated 600 women who were given the defective implants. Whilst TUV has the right of appeal to a higher French court, some lawyers acting on behalf of women affected anticipate that the establishment of a redress scheme for women is now likely.     

Further, an earlier ruling by the Court of Justice of the European Union (CJEU), in relation to a preliminary reference from a German court, again regarding PIP implants, determined that in the face of evidence indicating that there was a risk a medical device did not comply with the requirements laid down in the old Directive, notified bodies were under a duty to take all the steps necessary to ensure that they fulfilled their obligations under the Directive [Elisabeth Schmitt v TUV Rheinland, (Case C-219/15)]. Ms Schmitt had received PIP implants in 2008 in Germany. She initiated proceedings against TUV Rheinland in Germany seeking EUR40,000 in compensation and a preliminary reference was submitted by the German Federal Court of Justice seeking to delineate the obligations of notified bodies to determine the matter. Notified bodies are the organisations tasked with certifying medical devices in the EU. The court ruled that notified bodies are under a general obligation to act with all due diligence when engaged in a procedure relating to declarations of conformity – in other words, when ascertaining if the medical device meets the necessary performance and safety standards.   

Building on the above views expressed by the CJEU, the MDR and IVDR now aim to create greater uniformity and ensure all notified bodies are operating according to a common framework. The Regulations provide for an increased level of oversight of notified bodies by national regulatory authorities and notified bodies will be subject to tighter controls more generally, so as to ensure that the certification of medical devices is more transparent.

In the Irish context, the Product Liability Directive was transposed into Irish law in 1991 by way of the Liability for Defective Products Act 1991. Given the new regulations and rapid increases in technology – particularly in the medical sector in the last two decades, especially as regard to smart tech – an overhaul of the current product liability system may be needed to ensure that these legislative instruments remain fit for purpose and capable of responding to emerging trends.           

There is concern in the corporate medtech sector in Ireland, especially the start-up sector, that the new regulations will lead to a trend of decreased activity in medical device innovation in the EU. It is feared that some start-ups in the sector may not have the funds or resources to meet the more stringent EU requirements and so may seek approval in other jurisdictions, where costs for securing regulatory approval may be lower.   

EU Consumer Collective Redress Directive (EU) 2020/1828

There is currently no legislative framework or legal procedure in Ireland to allow collective redress or class actions akin to those found in other jurisdictions. Analogous procedures are, however, provided by the rules of court under Irish law and consist of (i) representative actions (pursuant to Order 15, rule 9 of the Rules of the Superior Courts) and (ii) test cases.     

However, a major development on the horizon will be the implementation across the EU of a new consumer collective redress directive. 

Directive (EU) 2020/1828 (the Directive) allowing for representative actions for the protection of consumers’ collective interests was published in the Official Journal of the EU on 4 December 2020 and is scheduled to be transposed into Irish law by 25 December 2022, becoming effective in June 2023. The Directive is intended to improve consumers’ access to justice and to facilitate redress where a number of consumers are victims of the same infringement of their rights. The Directive will mandate that a procedure for representative actions is available across the entirety of the EU, and will introduce safeguards for the avoidance of abusive litigation and illegal practices. 

The Directive aims to respond to several scandals involving breaches of consumers’ rights by large entities – examples in Ireland include the mis-selling of credit card protection policies to 160,000 domestic consumers. EU countries must now establish a minimum of one effective procedural mechanism to permit “qualified entities” to initiate representative actions to secure redress on behalf of consumers harmed by an infringement of applicable EU law. 

Qualified Entities

The Directive will enable “qualified entities” to litigate representative actions aimed at the protection of the collective interests of consumers. 

For cross-border representative actions, a qualified entity must meet certain criteria to be designated as such. These include being a non-profit organisation in the area of consumer protection, being independent, having a legitimate interest in ensuring compliance with the provisions of the Directive and having a certain degree of permanence and level of public activity. 

Qualified entities who seek national redress only are to be regulated by domestic law, however. In this regard, the Directive appears to leave up to member states the task of determining the meaning of qualified entities capable of bringing representative actions in Ireland. As Ireland does not have an existing regime for representative actions, it could take a considerable period of time to agree upon, and draft, such a definition.     

Costs and Third-Party Funding

The Directive endeavours to avoid the adoption in the EU of an “American-style” class actions regime. In this context, the “loser pays” principle in relation to the costs of legal proceedings is firmly endorsed. As such, an unsuccessful party involved in a representative action for redress will be obliged to meet the legal costs of the other party in line with the applicable national legal regime. 

The Directive will not prohibit third-party funding of qualified entities and redress actions. This will be a major intervention by the Directive in an Irish context where, currently, the torts of maintenance (the giving of assistance or encouragement to one of the parties to litigation by a person who has neither an interest in the litigation nor any other motive recognised by law as justifying interference) and champerty (a type of maintenance which involves an agreement between the claimant and a third party to divide the compensation between them in return for the third party’s support of the litigation) prohibit third-party funding. In Ireland, litigation is generally self-funded by claimants and such claimants will normally be liable for the opposing party’s costs in the event that they are not successful before the courts. However, many actions in Ireland are pursued by claimants through solicitors on a “no win, no fee” basis.

Notwithstanding that third-party funding will be permitted in principle, the Directive requires qualified entities to be fully transparent about the source of funding in order to enable member states to prevent conflicts of interest between third-party funders and qualified entities. Member states must also protect consumers’ interests by ensuring that a third-party funder does not unduly influence the decisions of the qualified entity in the context/conduct of a representative action, including in relation to settlements. The courts will be capable of inquiring into the source of funds and can require the qualified entity to refuse the funding provided or reject the standing of the qualified entity to bring an action in specific cases. We anticipate that if third-party funding is authorised in Ireland it will be heavily regulated.   

Redress

Qualified entities are permitted to pursue injunctive and redress measures including redress orders, declaratory orders, compensation, repair, replacement, price reduction, contract termination or reimbursement of the price paid, as appropriate, under the Directive. Under the current domestic legal regime, only declaratory relief (as opposed to compensation, which is generally unused) and test cases (which can be costly and inefficient) can be pursued in a collective type manner. A test case is a "lead case" which raises issues which are common in other related claims, and the court ruling on the test case will act as a common law precedent only for those other claims.

Opt-In and Opt-Out

Member states will be able to choose between an opt-in system, an opt-out system or a combination of both. Where an opt-in system is used, consumers would be required to express their wish to be represented by the qualified entity, while consumers in an opt-out system would be automatically represented by the qualified entity until they expressly state that they do not wish to be. Some commentators have noted that Ireland is likely to choose an opt-in system in order to fully protect consumers’ legal rights. An opt-out system would likely infringe Irish constitutional principles on the basis that while individuals have a right of access to the courts, they cannot be compelled to pursue such an action. 

Settlements

The Directive promotes collective settlements within a representative action. However these settlements will require court or administrative approval and will be binding once approved. As such the possibility for individual consumers to accept or refuse the terms of settlement entered into by a qualified entity will be removed. This will likely act as a major benefit for businesses who wish to secure a quick and cost-effective resolution. 

Comment

Annex I of the Directive specifically references health as a ground which may give rise to a collective action, and so cosmetics and consumer medical devices will be capable of attracting the Directive’s application.

In general, by adopting the loser pays principle, by prescribing qualified entities as being exclusively capable of bringing collective actions and restricting the utilisation of third-party funding, the Directive, it has been argued, strikes the right balance, lessening the danger of abusive litigation. The European Parliament’s Committee on the Internal Market and Consumer Protection has also been supportive of this approach.

However, its prospective impact should be seen in context. Under the Directive, there is still reliance on third-party entities to pursue litigation on a consumer’s behalf and these entities may simply choose to not pursue a certain action or may be unable to. Some academic commentary in Ireland states that the impact of the Directive in this jurisdiction will depend on which bodies and consumer organisations apply for standing under its provisions, and on their ability and interest in bringing representative actions.

It is likely that the Directive will result in an increased trend in claims in the area of product liability, including medical devices. Due to the risk of increased litigation, companies will need to evaluate and increase their regulatory, governance and compliance management to ensure that they are equipped in the best possible manner to respond to any prospective mass litigation. 

Further, as explained, member states will retain discretion in how they implement aspects of the Directive. This may prompt a trend of "forum shopping", whereby the domestic legislative regimes adopted by certain member states become more favourable to litigants to pursue cross-border claims. In this regard, some commentators argue that the Directive may have a significant impact if multiple designated bodies, including the strong consumer organisations found in other jurisdictions, come together and bring a cross-border action in cases of mass harm. As such, there is the potential for a greatly increased trend of pan-European medical device litigation for defects affecting products in circulation across multiple EU member states. Such litigation could be a gateway for Irish consumers to engage in collective redress for the first time from a country where a substantial tradition of collective actions had not previously existed.

Kennedys

Bloodstone Building
Sir John Rogerson's Quay
Dublin D02 KF24
Ireland

+353 1 878 0055

+353 1 878 0055

contactus@kennedyslaw.com kennedyslaw.com
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Trends and Development

Authors



Kennedys is a global law firm with expertise in dispute resolution and advisory services, employing over 2,300 people in 24 countries around the world. The firm handles both contentious and non-contentious matters and provides a range of specialist legal services, including corporate and commercial advice, but with a particular focus on defending insurance and liability claims. Kennedys’ Dublin office has one of the largest dedicated insurance practices in Ireland and combines legal and regulatory expertise with practical business advice. Its specialist legal services span the insurance and reinsurance, healthcare and commercial dispute sectors. The firm's Dublin healthcare team advises hospitals, their insurers and healthcare professionals on contentious and non-contentious healthcare legal issues, including medical malpractice litigation, inquests, health law advice and regulatory matters.

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