Life sciences

In this chapter of our Annual Insurance Review 2019, we look at the main developments in 2018 and expected issues in 2019 for life sciences.

Key developments in 2018

Gee v DePuy was handed down on 21 May 2018 and is a boon for insurers of manufacturers of complex products, particularly medical devices. The judge found that DePuy’s “metal-on-metal” hip product was not defective under the Consumer Protection Act 1987.

Manufacturers and their insurers will be encouraged by this decision in the modern era of complex products in three notable respects.

First, the court found that evidence of compliance with regulatory standards will have considerable weight in the successful defence of a product, because those standards have been set at a level deemed appropriate for safety purposes. As regulations tighten, we expect that manufacturers will increasingly rely on this defence.

Second, the court rejected the claimants’ reliance on statistics, deciding they were unreliable because they were subject to a number of limitations and confounding factors. As ever more performance data is generated concerning medical products, the judgment provides timely guidance on the dangers of leaping to conclusions based on flawed statistical analysis.

Third, the judgment robustly confronted the issue of fake news, which is increasingly adding to the litigation risk associated with medical products for insurers. There was evidence of “panic engendered by … sensationalist media reporting” that skewed the evidence relied on by the claimants. The judgment suggests that the litigation was triggered and gained momentum because of unbalanced media reporting of medical issues. Gee v DePuy is a timely reminder of the importance of media outlets investigating the bigger picture to avoid stories amounting to fake news.

Gee v DePuy has offered product liability defendants and their insurers a genuine cause for optimism.

What to look out for in 2019

Insurers in the life sciences sector will see increasing commercial and governmental support for the use of artificial intelligence in hospitals.

At the turn of the year, the Government published its Sector Deal for Life Sciences, which included a stated intention for the UK to lead the way in developing innovative techniques and devices that make use of advances in computer programming. Over the past few months, there have been further reports of studies demonstrating that machines can perform better than humans when it comes to carrying out reliable, swift and early diagnoses of some conditions. Artificial intelligence brings with it the added advantage that it can reduce the costs associated with healthcare.

Insurers will want to ensure that artificial intelligence, whether algorithms or machine learning used in surgery, is brought to the market with appropriate safeguards to reduce the associated risks. Insurers should ask how easy it would be to establish where liability lies in the event of litigation. Manuals that accompany the products should set out clearly how the products are to be used and emphasise the need for doctors to exercise their clinical judgement in relying on them.

Published data on a product’s performance in clinical trials should be collated before the device is released to the market. In the event of concerns being raised, data can be used to demonstrate safety to regulators or to defend speculative litigation.

We expect to see the march of artificial intelligence continue in 2019. Making sure it is deployed with as little risk as possible will require a deft human touch from manufacturers and their insurers.

Authored by Peter Rudd-Clarke.

Download our full Annual Insurance Review 2019 for more insights.