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Freshfields Risk & Compliance

| 4 minutes read

Developing new products to fight COVID-19? Regulatory and product liability implications to consider

The current COVID-19 pandemic is having a devastating impact on the lives of many and at the same time causing unprecedented demands on public health. Demand for certain medical devices, such as ventilators, and personal protective equipment (PPE) has surged, while researchers are working hard to trial different treatment options and, in due course, to develop a vaccine.

Many companies have stepped up to meet this public health challenge. This response has been impressive, but it is not without risk for the businesses concerned. In most cases, new products that are developed to respond to the pandemic will still need to meet pre-crisis regulatory standards before they can be used to treat patients or offered to the wider public. And there is still the potential for civil liability if treatments and vaccines are ineffective or – worse – cause harm.

These risks are exacerbated by the fact that the development cycles for these new products are, in many cases, accelerated; and that, in some cases, businesses are moving outside their core areas of expertise – such as car manufacturers who are repurposing production lines to produce ventilators – in order to help the public good.

In this post, we look at some of the product liability and healthcare regulatory risks associated with these developments, and ways in which businesses and regulators are looking to mitigate them.

Regulatory pathways in a pandemic

In normal circumstances, to bring a new medical device, such as a ventilator or PPE equipment, to market requires extensive pre-launch testing and validation, often with the involvement of an external notified body. Vaccines and other pharmaceuticals are subject to even stricter regulatory requirements than medical devices, including requirements for affirmative approval by regulators. Regulatory regimes for all healthcare products seek to balance the risks of unsafe or ineffective products reaching the market with the need to ensure that patients can benefit, as soon as possible, from innovative treatments.

The current public health emergency has changed that balance. In recent weeks, for example, several EU, UK and US authorities have taken steps to relax their usual processes. As an example, the EU Commission has published a recommendation (PDF) setting out the circumstances in which PPE or medical devices can be placed on the market despite not carrying the usually mandatory CE marking. Similarly, the UK Medicines and Healthcare products Regulatory Agency (MHRA) has recognised (PDF) that newly developed ventilators will not be CE-marked and will be approved through the ‘exceptional use’ channel.  In the US, the Food and Drug Administration (FDA) has issued emergency use authorizations (EUAs) allowing the import and marketing of certain PPE masks and ventilators that have not previously been authorised by the FDA.

In the search for a vaccine, the European Medicines Agency has indicated that it will be "flexible and pragmatic during the assessment of the affected clinical trial data submitted to the Agency as part of the marketing authorisation applications". Similarly the MHRA has stated that they will expedite the assessment of certain medicine authorisation applications and be flexible with some of the procedures and reporting requirements during clinical trials.

While these relaxations are welcome and necessary, any new products are still regulated and must meet certain standards of safety. The EU Commission recommendation referenced above still requires authorities to be satisfied that non-CE marked products “ensure an adequate level of health and safety in accordance with the essential requirements” as set out in the relevant directives and regulation. Under the EUAs issued by the FDA in the US, the exempted masks and ventilators still need to meet certain safety, performance and labelling standards. Similarly, a report published by the International Coalition of Medicines Regulatory Authorities (PDF) emphasises that robust evidence is needed for the approval of any drug; standards should not be dropped.

Mitigating litigation risk

The current crisis has similarly not suspended product liability rules, which allow consumers who suffer harm as a result of exposure to a defective product to recover compensation. In the EU, it is no defence to such a claim for a producer to show that their product complied with applicable regulation – so even if new healthcare products comply with rules on medical devices or medicinal products, this will not necessarily shield a producer from lawsuits. 

While we might hope that the claimant bar would cut manufacturers slack given that they are trying to bring life-saving products to the market in a time of crisis, past experience suggests that that may be optimistic. As a cautionary example, negligence claims were brought against health authorities and hospitals worldwide in the aftermath of the 2003 SARS outbreak.

The risks of a product not performing as expected may be higher where manufacturers are producing unfamiliar products and producing them at a faster pace. Mitigating these risks is difficult, but obtaining liability protection from governments or, as a second best, from the purchaser of the product (where different) may offer one solution. A recent letter from the UK government (PDF) to the Parliamentary Public Accounts Committee suggests that it has offered to indemnify the designers and manufacturers of rapidly manufactured ventilators against potential product liability claims. There are also news reports from the US suggesting that hospitals have provided contractual protection to organisations that have pivoted to manufacturing PPE. The terms of any such contractual protection will need to be carefully negotiated.

Product liability insurance may also be an option. Many businesses will typically have some form of product liability insurance in place, so companies who are repurposing their existing production processes will need to check whether their insurance covers liability for the production of the new product and, if not, look to extend their policy to cover it. For policies that do cover new product development, the insured may need to notify the insurer before it is brought to market in order to preserve coverage.

In summary, this a fast-moving area with manufacturers developing products at high speed and governments and regulators showing flexibility where they can. But businesses must continue to ensure that their products are safe and effective, and otherwise comply with regulatory standards, and consider how best to mitigate product liability risks.

More information on the responses to other, related issues that manufacturers should consider can be found in our recent blog posts on public procurement, competition and state aid.

“Regulatory regimes for all healthcare products seek to balance the risks of unsafe or ineffective products reaching the market with the need to ensure that patients can benefit, as soon as possible, from innovative treatments. The current public health emergency has changed that balance.”


covid-19, product liability, global