Today, Reed Smith is hosting a client roundtable in London, “Identifying and Mitigating Risk in a Changing Global Economy,” for life sciences clients.  In light of that, we thought it would be a good idea to have a blogpost that’s relevant to what’s hot in the UK.  Well, there’s nothing hotter on that side of the Pond right now than the increasingly shambollixed up approach to Brexit.  One thing we were wondering about, over here, is whether a crash out Brexit would at least get rid of, in the UK anyway, a couple of extremely unfavorable decisions from the European Court of Justice that we’d blogged about earlier.  We didn’t know, so we asked Simon Greer, a Reed Smith lawyer in our London office if he knew the answer.  He did, and below is his response.  As always our guest posters deserve all of the credit (and any blame) for their posts.

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The timing and implications of Brexit in the UK are currently one of life’s great unknowns. The latest position is that Theresa May’s latest proposed Brexit deal will be voted on by MPs in Parliament by 12 March 2019. However, the Prime Minister has also indicated that if her latest deal is rejected, MPs will be offered two separate votes shortly thereafter:

  1. Whether or not MPs would support a ‘no-deal’ Brexit, meaning that the UK would only leave without a deal on 29 March 2019 if there was consent from the House of Commons for a ‘no-deal’ Brexit; and
  2. If the prospect of a ‘no-deal’ Brexit on 29 March 2019 is rejected by MPs, they will then be given a vote by 14 March 2019 as to whether the UK should request an extension to the 2 year Article 50 process, thereby delaying the UK’s withdrawal to a date beyond 29 March 2019 (the length of such a delay is, as yet, unknown).

In the pharmaceutical industry, the impact of a potential ‘no-deal’ Brexit on 29 March 2019 on the precedential value of the decisions of the Court of Justice of the European Union (“CJEU”), will be of significant interest. This is because the CJEU’s recent decisions in the pharmaceutical sector have had a significant impact on the law in the UK, adverse to pharmaceutical companies, two examples of which we have discussed in previous blog posts:

Causation or No Causation, That Is the Question.

Bad News from Europe for Makers of Life-Saving Medical Devices

So, would a ‘no-deal’ Brexit effectively re-set the clock and eliminate the consequences of CJEU’s decisions in the UK made prior to Brexit?  The answer, unfortunately, is: no, so a ‘no deal’ Brexit would not even have this silver lining.

Whilst Theresa May on 17 January 2017 stated that: “we will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain. Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast.  And those laws will be interpreted by judges not in Luxembourg but in courts across this country.  Because we will not have truly left the European Union if we are not in control of our own laws”, that rhetoric was hollow.  Her comments were in fact forward looking only, rather than applying to adverse CJEU decisions made prior to Brexit.

This is clear from the provisions of the EU (Withdrawal) Act 2018 (“the Act”).

In terms of CJEU decisions made after Brexit, the courts of the UK will no longer be bound by them but they will still be permitted to have regard to [Ed. Note – that’s British English for ‘follow’] them, if they are relevant to an issue that is before them. Sections 6(1) and (2) of the EU (Withdrawal) Act 2018 provide:

6 Interpretation of retained EU law

(1) A court or tribunal—

(a) is not bound by any principles laid down, or any decisions made, on or after exit day by the European Court, and

(b) cannot refer any matter to the European Court on or after exit day.

(2) Subject to this and subsections (3) to (6), a court or tribunal may have regard to anything done on or after exit day by the European Court, another EU entity or the EU so far as it is relevant to any matter before the court or tribunal.

As for CJEU decisions made before Brexit, these will form part of what is described as ‘retained’ EU law under the Act. The treatment of retained EU law after Brexit in the UK is explained in sections 6(3) to (6) of the Act (set out below). In short, whilst the Supreme Court in the UK and Scotland’s High Court of Justiciary (the supreme criminal court in Scotland) are not bound by any decisions of the CJEU made prior to Brexit, all other courts in the UK will be bound by CJEU decisions made prior to Brexit:

(3) Any question as to the validity, meaning or effect of any retained EU law is to be decided, so far as that law is unmodified on or after exit day and so far as they are relevant to it—

(a) in accordance with any retained case law and any retained general principles of EU law, and

(b) having regard (among other things) to the limits, immediately before exit day, of EU competences.

(4) But—

(a) the Supreme Court is not bound by any retained EU case law,

(b) the High Court of Justiciary is not bound by any retained EU case law when—

(i) sitting as a court of appeal otherwise than in relation to a compatibility issue (within the meaning given by section 288ZA(2) of the Criminal Procedure (Scotland) Act 1995) or a devolution issue (within the meaning given by paragraph 1 of Schedule 6 to the Scotland Act 1998), or

(ii) sitting on a reference under section 123(1) of the Criminal Procedure (Scotland) Act 1995, and

(c) no court or tribunal is bound by any retained domestic case law that it would not otherwise be bound by.

(5) In deciding whether to depart from any retained EU case law, the Supreme Court or the High Court of Justiciary must apply the same test as it would apply in deciding whether to depart from its own case law.

(6) Subsection (3) does not prevent the validity, meaning or effect of any retained EU law which has been modified on or after exit day from being decided as provided for in that subsection if doing so is consistent with the intention of the modifications.

In summary, pharmaceutical companies need to be mindful of the fact that existing CJEU decisions made prior to Brexit, even if it is a ‘no-deal’ Brexit, will be binding on courts in the UK, unless those decisions come before the Supreme Court and are overruled by a new, post-Brexit decision of the Supreme Court, which would then take primacy in the UK over the prior CJEU decision.

This guest post — only our second post ever on European issues — is brought to you by Reed Smith partner Marilyn Moberg and (in the UK) associate Bond, Kathryn Bond (sorry, couldn’t resist).  Our previous (and only) foray into European product liability was not a happy one.  This post, however, discusses a much more favorable product liability development in Britain, and with Brexit we’re hoping that the Brits build on this decision and thumb their noses at the prior decision by the EU Court of Justice.

So without further ado, here are Marilyn and Kathryn.  As always, our guest posters deserve 100% of the credit (and any blame) for what follows.

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For many years now I have been reading this excellent blog prepared by my colleagues and thinking “how can they be so prolific and witty time and time again”? I have continued to tell myself that “I need to do a guest post” sometime, but alas have never found the time to do it. Perhaps the idea of delving in and being compared to the posts of the others was–, OK, I will admit it–, intimidating even after many years of practice. I guess, living in LA, the analogy is like those various guest hosts who were asked to step in for a night for Johnny Carson (yes, I am showing my age). But, hey, Joan Rivers and Jay Leno did OK, so here goes.

For the blog today though we are traveling across the pond to “merry old England,” and my London colleague (Kathryn Bond) and I will discuss a topic very familiar to those of us in the US: the Metal on Metal litigation (and no, I don’t mean the Anvil heavy metal album).

While this litigation has been going for years here, it is in its infancy in the UK, with the first two group product liability actions against manufacturers of metal-on-metal hip prostheses due to be heard by the English Courts this year, with trials scheduled to take place in October 2017.

However, and as Bexis has confirmed “blogworthy,” there has already been a landmark English High Court decision in one individual case concerning a metal-on-metal hip prosthesis. The case is Wilkes v. DePuy International Limited [2016] EWHC 3096 (QB). It was decided in the Queen’s Bench Division of the English High Court.  For those of you – most of you – unfamiliar with the UK’s court structure, the High Court is a senior court that typically deals with first instance decisions of important and/or high value cases, but also handles appeals over decisions made by inferior courts. The High Court has three divisions: the Queen’s Bench Division, the Chancery Division and the Family Division. The Wilkes case was heard in the Queen’s Bench Division (a division that most commonly handles disputes relating to personal injury, negligence, breach of contract, breach of a statutory duty and libel). Appeals against civil decisions made by the Queen’s Bench Division are heard in the Court of Appeal. Appeals against Court of Appeal decisions are heard in the Supreme Court (the highest court in England).

The decision is favorable for the defense, both in its result and in its interpretation of UK law governing allegedly defective products. For those of you not familiar with the law, here is a short primer. Under UK product liability law, irrespective of any rights an individual may have under contract, there are two key actions available to an individual who claims to have suffered personal injury from a defective product. These are:

1. Common law negligence;

2. Consumer Protection Act 1987 (the “CPA”).

The Wilkes case concerned a claim under the CPA.

The CPA imposes strict liability on manufacturers of defective products for any harm caused by their products. “Strict liability”, like in the US, means that it is irrelevant whether the manufacturer was at fault. The injured party just has to prove that the product was defective and that the defect caused him harm.

Section 3 of the CPA states that a product is defective if “the safety of the product is not such as persons are generally entitled to expect,” taking into account “all the circumstances”. For ease, we will refer to this as the “safety expectation test”. This reminds us of the “consumer expectation” test for design defect that applies in some United States jurisdictions for certain products. The Wilkes case is significant because of its interpretation of this section 3 of the CPA.

It has been about 16 years since the UK courts have dealt with this issue, and before Wilkes, the leading case on the concept of “defect” was A v. National Blood Authority (2001) 60 BMLR 1 (“A v. NBA”), from 2001. In that case, the claimants were infected with hepatitis C as a result of blood transfusions.

In determining whether the blood was “defective” under the CPA, the A v. NBA Court took the following approach:

  • first, identifying the harmful characteristic that caused the injury (in other words, identifying a causal link between the defect and the harm suffered);
  • determining whether the product was “standard” or “non-standard” (i.e., does the product perform as the manufacturer intended); then
  • taking into account the relevant circumstances, depending on whether the defect was “standard” or “non-standard.”

A v. NBA held at paras [55], [80] and [173] that the infected blood was “defective” even though the manufacturer could not have known that the specific blood bags concerned were infected — no test for the screening of hepatitis C had been introduced in the UK at the time of the transfusions. The mere fact that there was an inherent risk of the blood being infected was not enough to protect the defendant because the public at large was entitled to expect that the blood transfused to them would be free from infection. In other words, the inherent risk of infection was not publicly known or socially accepted as such a risk. The A v. NBA decision has been criticized in the years since it was decided as being overly harsh on manufacturers.
The Wilkes case is significant because the Court departed from this long standing precedent—and in a way that is jolly good for the defense (or, as they would say in Britain, the “defence”).

Some basic info: Wilkes received a hip replacement implant in 2007, which fractured 3 years later. The implant was a steel femoral shaft called a “C-stem” manufactured by DePuy. Wilkes claimed at paras [55]-[56] of Wilkes that a component of the C-stem was defective, relying in particular on the judgment in A v NBA.

The Court rejected Wilkes’s product defect claim (and more generally the A v NBA approach to product defect) for the following reasons:

1. First step causation test: the first test used by the Court in A v NBA does not work because it is circular – you cannot prove a causal link between the defect and the harm without finding out whether there is actually a defect. The focus should be on identifying the defect itself. [See para [58] of Wilkes]

2. Identifying the defect – the safety expectation test:

(a) All relevant circumstances to be taken into account: There should not be a rigid set of rules specifying which circumstances should be taken into account in determining whether the product satisfies the safety expectation test. The issue of defect is “necessarily one of open-textured judgment, untrammelled by any rigid rules outside the few that appear in the [CPA] itself”. [See paras [76]-[79] of Wilkes]

(b) Risk-benefit analysis and avoidability: The Court acknowledged that no medicinal product is 100% safe – something that will seem obvious to our US readers, but which is a major advance in the UK. There needs to be a risk-benefit analysis to ensure that the potential benefits of the product are balanced against its inevitable risks. The ease and extent to which the risks can be avoided or mitigated is also relevant. For example, there is a risk of stem fatigue in any hip implant (a C-stem is generally expected to last for 10-15 years). According to DePuy’s expert, the risk of a failure in the relevant component of the C-stem was very low (0.004%). Furthermore, the changes required to remove the risk would make the prosthesis more uncomfortable and potentially more likely to fail on other respects. [See paras [81]-[89] and [119] of Wilkes]

(c) Categorization of standard/non-standard defects to be ignored: In A v NBA, the Court intentionally excluded the risk-benefit analysis for non-standard products. The Court in Wilkes believed that the distinction between standard and non-standard products was “unhelpful” and “positively dangerous.”  Whatever the type of product concerned, all relevant circumstances should be taken into account. [See paras [90]-[96] of Wilkes]

(d) Compliance: As medicinal products and medical devices are highly regulated, the fact that the product complies with such regulations is (although not an automatic defense) strong evidence that the product has a level of safety that passes the safety expectation test. In Wilkes’s case, it was an important fact that the C-stem went above and beyond the applicable regulatory requirements. [See paras [99]-[101] and [124] of Wilkes]

(e) Warnings and learned intermediaries: Warnings given to the consumer do have an impact on the level of safety that persons are generally entitled to expect.  In the case of Wilkes’s C-stem, the information provided to the healthcare professional responsible included a warning about the risk of fatigue failure caused by various factors, including obesity and activity levels (both of which may have played a role in the C-stem failing earlier than anticipated).  The intermediary of a healthcare professional was not considered in much detail in A v NBA, save for noting at para [55] that “doctors and surgeons knew [the risk of infection of transfused blood], but did not tell their patients unless asked, and were very rarely asked”. Although the Court acknowledged at para [108] in Wilkes that giving warnings to the healthcare professional did not provide an automatic defense, it was sufficient in the circumstances that the warning was given to the healthcare professional in accordance with UK law, even though it was not given to the patient directly. In particular, it was noted that there is often no interaction between the manufacturer of the C-stem and the patient. It would therefore be appropriate for information about risks relating to the C-stem to be passed on to the patient by the treating surgeon. [See paras [102]-[108] Wilkes]

The Wilkes Court concluded that, although the C-stem fractured earlier than anticipated, the C-stem was not defective because it passed the safety expectation test. The C-stem’s premature failure was brought about by a “constellation” of variable factors, which (although expressly warned about) could not have been predicted by the manufacturer.

The Wilkes judgment adopts many of the doctrines and principles that apply in the US and should continue to apply to these products:  risk/benefit, learned intermediary doctrine, and compliance with regulations as evidence of standard of care.  This is welcome news for manufacturers who sell medical products in the UK.  It will be interesting to see what approach the English Courts will take in the two group actions due to take place later this year and we will continue to monitor this.  So assuming we are “invited back,” you can look forward to another “guest post” that Jay Leno would (hopefully) be proud of …