Defective medical devices: the ‘defence of regulatory compliance’ under Swiss law – does it need to be reassessed?

Janine Reudt-Demont

Niederer Kraft Frey, Zurich

janine.reudt-demont@nkf.ch

Introduction

The Swiss Product Liability Act (PLA) does not only apply to traditional consumer products, but also to highly technical, regulated products such as medical devices.[1] Under the PLA, a manufacturer can exculpate itself from liability if, among other things, it proves that the product defect could not have been detected according to the state of the art in science and technology at the time the product was placed on the market (Article 5, paragraph 1 PLA). When providing this evidence, manufacturers of regulated products often rely on the so-called ‘defence of regulatory compliance’: ie, they prove that they have met all the requirements imposed on the product by the legislation (eg, with regard to prohibited substances, testing obligations, safety, etc). According to current Swiss case law and doctrine, however, this proof is not sufficient for exculpation under Article 5, paragraph 1 of PLA. This argument is understandable with regard to the regulation of medical devices under the former Medical Devices Ordinance.

However, when the revised Medical Devices Ordinance (MedDO) came into force on 26 May 2021, the regulation of medical devices became considerably stricter. The PIP breast implant scandal[2] and the widespread recalls of metal-on-metal hip prostheses were the main reasons for implementing a more stringent regulation.[3] Based on the new regulation, some medical devices in the lowest class (class I) were classified in higher risk classes, and now require the involvement of an external conformity assessment body (‘Notified Body’). This means that the manufacturers of these products can no longer certify these themselves. Further examples of the stricter regulation are the obligation to carry out a clinical evaluation or even a clinical trial before placing a new product on the market, and the new reporting obligations implemented as part of product monitoring.

Against this background, this article discusses whether the defence of regulatory compliance with regard to medical devices placed on the market in accordance with the stricter provisions of the MedDO (hereinafter also referred to as ‘MDR medical devices’), or at least the assessment of this exculpation argument, needs reassessment.

Prerequisites for liability under the PLA

Liability of the manufacturer under the Product Liability Act requires a product defect, damage and a causal link.[4] Liability under the PLA is therefore a causal liability (Kausalhaftung), as fault on the part of the manufacturer is not required.[5] However, as will be shown below, the manufacturer can exculpate itself from liability in accordance with Article 5 PLA.

When is a product considered defective?

Proof of a product defect by the injured party is central to the manufacturer’s liability. According to Article 4, paragraph 1 of PLA, a product is defective ‘if it does not offer the safety that one is entitled to expect taking all circumstances into account’. Circumstances to be taken into account are in particular (1) the way in which the product is presented to the public, (2) the product use that can reasonably be expected and (3) the time at which the product was placed on the market (Article 4, paragraph 1 PLA; the so-called ‘catalogue of circumstances’). The PLA then states that a product is not defective simply because an improved product was subsequently placed on the market (Article 4, paragraph 2 PLA); ie, already with respect to the definition of ‘defectiveness’, reference is made to the time of placing the product on the market and indirectly to the ‘state of the art in science and technology’ at that time.

In terms of defect types, Swiss doctrine distinguishes in particular between manufacturing or production defects and design defects.[6] Manufacturing or production defects are errors in the manufacture of the product that only affect individual products or batches (including outliers).[7] Design defects are fundamental errors in the design, construction or conception of the product that affect the entire series of the corresponding product type.[8] However, in view of the wording of Article 4 of PLA, as reproduced above, and in view of recent case law, particularly in the area of medicinal products and medical devices, this distinction is of little relevance, because a technical defect per se does not have to be proven by the injured party. It is sufficient to prove that the user’s safety expectations (taking all circumstances into account) were not met.[9]

The distinction between manufacturing or production defects and design defects is nevertheless relevant here, as the defence strategy of the defence of regulatory compliance is mostly applied in case of design defects. Accordingly, these are also the focus of this article.

Exculpation: development defects

According to Article 5, paragraph 1 of PLA, the manufacturer is not liable for a defective product if, among other things, it proves that (1) the defect is due to the fact that the product complies with binding, officially issued regulations or that (2) the defect could not have been detected according to the state of the art in science and technology at the time the product was placed on the market. Accordingly, there is no possibility of exculpation based on proof that the product concerned was manufactured and placed on the market in accordance with the applicable law and all (regulatory) provisions – ie, the possibility of exculpation under the defence of regulatory compliance.

However, as explained above, the defectiveness is assessed with reference to the average safety expectations and in consideration of all circumstances. The regulation of the relevant products, which is often based on the state of the art in science and technology and refers to corresponding standards (eg ISO standards), which are constantly updated, is also decisive in this respect. This applies all the more to highly regulated products such as pharmaceuticals and medical devices. Therefore, the defence of regulatory compliance can be subsumed under Article 5, paragraph 1 of PLA as part of the manufacturer’s defence strategy and the corresponding proof of a development defect. In the rare case that regulatory compliance even led to the development of the defect, Article 5, paragraph 1 of PLA would apply.

The defence of regulatory compliance

The defence of regulatory compliance as a defence strategy of the manufacturer against liability under the PLA is relevant in two respects: on the one hand, with regard to the assessment of defectiveness in the context of the consideration of all relevant circumstances under which a product was placed on the market (Article 4, paragraph 1 PLA), and on the other hand, with regard to the exculpatory evidence of a development defect under Article 5, paragraph 1 of PLA. The state of the art in science and technology at the time the individual product in question was placed on the market is decisive for providing the corresponding proof of exculpation.[10]

Under the defence of regulatory compliance, the manufacturer claims having taken all necessary measures in accordance with the legislation and the state of the art in science and technology when placing the product on the market (including product safety), and having developed and placed the product on the market in accordance with these regulations.[11]

Discussion of previous case law

According to long-standing case law, compliance with regulatory requirements (including product safety laws) does not exclude a product defect per se. Rather, compliance with these regulations can in principle only protect against a finding of fault (including negligence). However, in contrast to general tort liability, such fault is not required under the PLA for liability to be affirmed (see above). Accordingly, the fact that the product meets the legal requirements cannot exempt the defendant from liability in the context of causal liability (verschuldensunabhängige Kausalhaftung). If it turns out that the product in question has a defect, it is irrelevant whether the product complied with the legal requirements. Such a defence is only possible if the product defect is precisely due to compliance with the statutory provisions (see Article 5, paragraph 1 PLA).

The author of this article agrees that compliance with regulatory requirements does not rule out a product defect per se. This applies in particular to manufacturing defects or outliers, which can also occur even if the manufacturer cannot be blamed for non-compliance with regulatory requirements. However, in the author’s opinion, with respect to design defects, it should not be forgotten that, according to Swiss legislation and case law, causal liability applies, but not strict liability (strikte Gefährdungshaftung). The legislator explicitly did not intend this; nor was ‘strict’ causal liability intended.[12] Furthermore, according to the legislator’s intention, the manufacturer should not have to assume liability for so-called ‘development risks’.[13]

With regard to therapeutic products, it should also be borne in mind that these undergo lengthy research, development and approval procedures. Only those therapeutic products that meet all regulatory requirements, including product safety, and have a positive risk/benefit ratio may be marketed. In other words, possible negative effects of the product (eg, metal abrasion in the case of metal-on-metal implants) or undesirable side effects are accepted as long as the patient benefit is significantly higher. These risks must be addressed by the manufacturer in the product information (instructions for use, package leaflet, etc).[14] If such a risk materialises and the manufacturer has sufficiently pointed this out, this must be taken into account when examining the aforementioned catalogue of circumstances (see above). Accordingly, it may already have to be concluded at this stage, namely when examining the prerequisite of defectiveness, that there is no defect within the meaning of the PLA and that liability must therefore be denied, as was the case in the Yasmin (contraception pill) ruling,[15] for example.

Unfortunately, these special circumstances relating to the marketing of therapeutic products were again not taken into account in the most recent known decision on medical devices by the High Court of the Canton of Bern.[16] Instead, on 26 November 2021, the court ruled that the manufacturer of a metal-on-metal hip prosthesis could not virtually cure a defective product design by providing appropriate instructions (namely a note in the instructions for use). In addition, the court held that a distinction must be made between regulatory requirements, which apply under the Therapeutic Goods Act (TPA), and the requirements of liability law. These are not congruent, which is why the defence of regulatory compliance is not relevant from the outset for the assessment of the question of liability.[17]

In contrast, the first instance court (Regional Court of Bern-Mittelland) had concluded that there was no defectiveness within the meaning of the PLA.[18] With regard to the provision of exculpatory evidence, the High Court of the Canton of Bern referred the case back to the lower court for the purpose of supplementing the facts and taking evidence. However, with regard to the assessment of the state of the art in science and technology when the product was placed on the market, it held that it was relevant that no clinical (long-term) studies had been carried out by the manufacturer, although this was not required by the legislation (namely the TPA and the MedDO) at the time. The fact that the manufacturer had refrained from carrying out clinical studies would therefore be of decisive importance for the assessment of the provision of exculpatory evidence. [19]

In light of this latest judgement of a second instance court and in view of the stricter regulation of medical devices in force under the MedDO, which inter alia declares clinical studies mandatory for high-risk products before these are placed on the market, the question arises whether the previous assessment of the defence of regulatory compliance under Swiss case law can be upheld or rather should be reassessed with respect to medical devices.

Is a reassessment necessary for MDR medical devices?

The revised Medical Device Regulation (MDR) is based on the European Regulation (EU) on medical devices.[20] The MDR was enacted with the motivation to create a higher level of health protection for patients and users and to dispel the general safety concerns regarding these products. The increase in the level of protection was to be achieved by setting higher standards for quality and safety, among other things. [21]

Enhanced requirements on certification and for the testing of medical devices before they are placed on the market

With the revised MedDO, various products were up-classified into a higher risk class. As a result, manufacturers of former class I products, for example, must now involve a Notified Body. Accordingly, these products can no longer be certified by the manufacturer itself. One of the aims of the examination by the Notified Body is to make the products even safer and to have compliance with the legal requirements and the state of the art critically assessed by a third party independent of the manufacturer. In other words, various medical devices must undergo an additional ‘safety check’. In addition, the requirements for Notified Bodies and their qualifications were considerably raised with the early partial revision of the MedDO on 25 October 2017, following the PIP breast implant scandal.[22]

The requirements for testing products have also been enhanced. For example, as part of the verification and validation of the product, which must be described in the technical documentation,[23] one must justify why certain tests (such as laboratory, application simulation or animal tests or trials) or clinical studies have not been conducted. For devices consisting of substances or combinations of substances that are intended to be introduced into the human body and that are absorbed by or locally distributed in the human body, the technical documentation to be prepared by the manufacturer and reviewed by the Notified Body must contain detailed information (including, for example, test design, methodology, etc.) and test results relating to studies on:

• absorption, distribution, metabolisation and excretion;
• possible interactions;
• local tolerance; and
• toxicity.

If such studies are missing, this must be justified.[24]

Proof of compliance with the basic safety and performance requirements must be specified in the technical documentation.[25] This includes confirmation of compliance with the relevant essential safety and performance requirements under normal intended use of the device, as well as the assessment of undesirable side effects and the acceptability of the risk-benefit ratio on the basis of clinical data that provide sufficient clinical evidence.[26] The scope of the clinical evidence must be appropriate to the characteristics of the device and its intended purpose.[27] For implantable devices and class III devices, with few exceptions, a clinical investigation – ie, a ‘systematic investigation involving one or more human subjects and conducted for the purpose of evaluating the safety or performance of a device’ – must always be carried out.[28]

Enhanced product monitoring requirements

Not only the regulations on certification and testing of medical devices before they are placed on the market, but also those on product monitoring after placing on the market have been significantly enhanced with the entry into force of the revised MedDO. In addition to the obligation of every manufacturer to maintain a monitoring system as part of its quality management system, manufacturers of higher-class medical devices (classes IIa, IIb and III) are now obliged to prepare a comprehensive, regularly updated safety report, the so-called Periodic Safety Update Report (PSUR). The PSUR is part of the technical documentation. For class I devices, a post-market surveillance report (PMSR) must be drawn up. The PMSR is also part of the technical documentation. In addition to the PSUR or PMSR, a summary report on safety and clinical performance must be prepared for devices in the highest risk class (class III and implantable devices). This report is primarily intended for professional users, but may also be addressed directly to patients, which is why it must be written in a manner appropriate to the intended audience. All reports must be submitted in advance to the Notified Body for validation.[29] The above-mentioned clinical evaluation also includes a clinical follow-up by the manufacturer after the product has been placed on the market.[30] The clinical evaluation and the associated documentation must be updated throughout the life cycle of the device on the basis of clinical data.[31]

Weighting of the defence of regulatory compliance argumentation in product liability proceedings

In view of these considerably stricter requirements for product safety under the revised MedDO, the author of this article argues for a stronger emphasis on the defence of regulatory compliance in product liability proceedings – both in the context of the assessment of defectiveness, namely the circumstances under which a product was placed on the market, and in the context of proof of exculpation pursuant to Article 5, paragraph 1 of PLA.

As mentioned, the risks and undesirable side effects of therapeutic products are inherent to the product. This must be taken into account all the more in the assessment of MDR medical devices, as comprehensive testing and clinical trials in accordance with the state of the art in science and technology are now also required for these devices – similar to medicinal products – before they can be placed on the market (see above). This applies in particular to class III high-risk products.

Of course, the defence of regulatory compliance cannot serve as a defence against asserted manufacturing defects or outliers, but it can certainly serve as a defence against design defects. Accordingly, if compliance with all requirements according to the state of the art in science and technology at the time the specific product in question was placed on the market is proven, liability for realised undesirable side effects and known negative effects which have been included in the benefit/risk analysis as well as in the product information and are therefore known, should be practically excluded.

Outlook: the new EU Product Liability Directive

On 12 March 2024, the European Parliament adopted a new EU Product Liability Directive(‘New Directive’),[32] which will come into force on 8 December 2024 and apply to products placed on the market or put into service after 9 December 2026.[33] As the Swiss Product Liability Act is based on the EU Product Liability Directive, this development is also relevant for Switzerland. It is therefore to be expected that the PLA will also be revised in the near future.

The New Directive entails a considerably stricter regime of product liability for companies, in particular as the definition of liable ‘manufacturers’ has been considerably broadened.[34] Under the New Directive, companies who have significantly modified a product outside the control of the original manufacturer and thereafter make it available on the market are also liable.[35] E-commerce platforms and fulfilment service providers are also liable according to the New Directive.[36] In addition, both the definitions of products subject to the New Directive and claimable damages will be significantly expanded and various limitations of liability will no longer apply.[37] In addition, all software, including standalone software and AI systems, now fall under the definition of a product.

With regard to the defence of regulatory compliance, the New Directive is not expected to bring any fundamental or major changes. However, the expansion of the definition of defectiveness is relevant, even if a defect is still defined as a failure to meet safety expectations. Under the New Directive, the catalogue of circumstances on the basis of which defectiveness is determined (currently eg, presentation of the product) has been expanded. In the case of products designed to prevent damage, for example, any failure of the product to fulfil its intended purpose is relevant.[38] Further relevant are recalls and other interventions by market surveillance authorities under product safety law.[39] The possibility of exculpation in accordance with the current Article 5, paragraph 1 of PLA remains in place.[40] However, with regard to product liability proceedings, the introduction of various simplifications of the burden of proof for the claimant is relevant. For example, under the New Directive, there is a presumption of defectiveness in the event of a breach of the (also newly introduced) duty of disclosure,[41] a presumption of causality in the event of typical fault damage and, in complex cases, even a presumption of defectiveness and causality if this is made plausible.[42]

It remains to be seen whether these changes will be incorporated into Swiss law in the future and, if so, to what extent. However, already today it is clear that the New Directive will lead to a considerable increase in liability for companies and will make it easier for claimants to provide evidence. It will therefore certainly not be any easier to prevail with the defence of regulatory compliance under the New Directive if such is transposed into Swiss law in one form or another.

Conclusions

The defence of regulatory compliance should be given more weight in product liability proceedings if the product in dispute is an MDR medical device (or other therapeutic product). This is in order to take the following circumstances into account.

Firstly, the introduction of strict liability was not intended by the legislator. However, if the defence argument of compliance with all regulations corresponding to the state of the art in science and technology when the specific product was placed on the market is given little or no consideration, this often leads to strict liability in cases of design defects. This must be prevented.

Secondly, the PLA was originally created as part of consumer protection law. If the PLA is applied to non-classical consumer products, in particular to highly complex regulated products such as therapeutic products with inherent risks, this circumstance must be taken into account, among other things, by giving greater weight to the defence of regulatory compliance. This applies all the more to medical devices today, as the corresponding regulation became considerably stricter with the coming into force of the revised MedDO. Similarly, in the case of highly regulated products that are not used directly by the end consumer, such as implantable medical devices, the justified safety expectations of the intermediate professional user (eg, the hip surgeon) must be adequately taken into account.

Thirdly, while this is not a legal argument, account should also be taken of the fact that MDR medical devices and medicinal products can only be placed on the market after extensive, lengthy tests and studies. If we still want manufacturers to invest in the development of new, innovative products, the defence of regulatory compliance should also be given more weight from this perspective.

It remains to be seen whether this plea for putting greater emphasis on the defence of regulatory compliance will be heard by the authorities applying the law. If the latest developments in the EU regarding the revised Product Liability Directive will also influence future Swiss law, this is doubtful. In this case, however, the author believes that the legislator should consider, in the interest of legal certainty and allowing manufacturers to better calculate their risks (and taking out respective insurance), to consciously opt for a different risk allocation than under the current law, namely for a strict liability of the manufacturer, as this seems to be the direction the revised EU Product Liability Directive is taking. At least, this seems to be the case with regard to products with a purpose to prevent damage, as liability is to be imposed for any failure to achieve the intended purpose under the New Directive. According to the opinion expressed here, however, a different solution would be preferable, namely the implementation of a liability regulation specific to therapeutic products under the Therapeutic Products Act as a lex specialis.[43]