Life sciences

In this chapter of our Annual Insurance Review 2018, we look at main developments in 2017 and expected issues in 2018 in the life sciences sector.

Key developments in 2017

The new EU Medical Devices Regulation 2017/745 came into force on 25 May 2017. It is the EU’s response to the high-profile medical products litigation of recent years, with which many insurers will be all too familiar. The EU had identified elements in the existing legislation (dating from the early 1990s) that meant manufacturers and patients were insufficiently protected.

The new Regulation takes effect in 2020 after a transitional period. It ushers in change designed to bring the regulation of medical devices into the 21st century. According to a House of Commons briefing paper of 20 November 2017, the current wording of the EU (Withdrawal) Bill means that the Regulation will not automatically be converted into UK law on Brexit day. However, the Medicines and Healthcare products Regulatory Agency has reported that its preparations to effect the Regulation continue, suggesting that the Regulation, or a substantially similar version of it, will be part of UK law.

Manufacturers will now be required to generate and maintain more data regarding the safe performance of their devices. Before products enter the market they will now be subject to greater scrutiny from Notified Bodies and, in some cases, expert committees will be formed to oversee products and testing before devices are approved.

For insurers, the beneficial effect of the Regulation will be twofold. The first is that medical devices will be subject to greater scrutiny before they are released. This assists at the underwriting stage because such products will present less of a risk. Then, if a manufacturer does face questions over the performance or safety of its device in future (or even claims), it will have at its disposal much more information to demonstrate that the product has achieved the necessary safety standard.

What to look out for in 2018

The trial Gee & Others v DePuy International Limited, under a Group Litigation Order, of hundreds of claims involving metal-on-metal hips manufactured by DePuy International Limited, is expected to conclude in early 2018, with a judgment to follow thereafter.

This case follows the ground-breaking case (involving the same manufacturer) of Wilkes v DePuy [2016]. In Wilkes, the court found in favour of the manufacturer in a judgment for the modern era. Hickinbottom J was willing to accept a wide range of circumstances as relevant to take into account in determining general expectations of safety. He stated that the fact that a medical product has received regulatory approval is a circumstance that will be given considerable weight in determining whether the product is defective under the Consumer Protection Act 1987. This provides manufacturers of highly regulated products with a strong defence argument: if regulators have approved a product then it should follow that the product meets the expected safety standard.

The judgment in Wilkes followed a different approach taken by the court in A v National Blood Authority [2001] (which had been seen as surprisingly pro-claimant). Now with Gee & Others coming to a conclusion,insurers will await this latest decision to see if it follows Wilkes in emphasising the importance of taking into account the fact that a product has been approved in a highly regulated sector. This is particularly relevant as manufacturers prepare to comply with the new Medical Devices Regulation (see above).

Download our full Annual Insurance Review 2018 for more insights.