Medical Device Link.

Originally Published MX March/April 2002

GOVERNMENTAL & LEGAL AFFAIRS

Preventing and Defending Product-Liability Claims

To avoid product-liability litigation, device manufacturers should start by reviewing their marketing strategies.

Kevin M. Quinley

Photo by Nick Koudis/PhotoDisc

With product-liability claims becoming increasingly commonplace, medical device companies must exercise utmost caution when preparing advertising and promotional materials for their products. Such material can trigger claims of defective warnings, overpromotion, and false advertising, which can spawn expensive claim settlements, whopping jury awards, runaway legal fees, and negative publicity. It can erode market share, deflate a company's stock price, and cripple growth plans.

It is therefore vital for medical device manufacturers to find ways to avoid product-liability claims arising from advertising and overpromotion. This article provides device companies with specific strategies designed to prevent product-liability claims, as well as tips on how to defend against such claims when they arise.

The Regulatory Context

FDA defines health fraud as promoting, advertising, distributing, or selling for human or animal use articles that are represented as being effective to diagnose, prevent, cure, treat, or mitigate disease (or other conditions), or provide a beneficial effect on health, but which have not been scientifically proven safe and effective (see http://www.fda.gov/ora/fed_state/DFSR_Activities/health_fraud.htm). Many device manufacturers are unaware of the fact that FDA considers fraudulent not only deliberately deceptive practices, but also those performed without adequate knowledge or understanding.

The logic behind this is simple: medical products that have not been proven safe can create health hazards when their use causes injuries or adverse reactions. FDA therefore expects device manufacturers to be responsible in their marketing, and fines companies that fail to take such precautions. To take one example, a medical device manufacturer, having promoted a brain-wave synchronizer designed to alter brain waves and relieve stress, had 78 cartons of its product seized and destroyed by U.S. marshals after FDA found the device to be unsafe. The device consisted of an audiocassette that emitted sounds, and eyeglasses with flashing lights that caused epileptic seizures in some users. The company suffered a $200,000 loss in inventory alone.

FDA also closely scrutinizes medical device manufacturers that promote their products in such ways that understate the risks associated with those products. This tends to happen with companies that depend on emotional advertising strategies. For example, a manufacturer of several skin creams directed toward healthcare workers claimed in its advertising material that the creams would help prevent the transmission of HIV and the herpes virus. While many of the creams contained antibacterial ingredients, there was little evidence to substantiate the claim that they would work against HIV. Through its heavily emotional advertising campaign, however, the company inadvertently understated risks in order to boost sales for a medical product that did little good.

FDA also closely monitors new areas of medical technology in which manufacturers have yet to provide evidence of long-term safety. The laser eye surgery market, for example, holds a large potential for product-liability claims. Some manufacturers of laser-assisted in situ keratomileusis (LASIK) systems promote their products as panaceas for nearsightedness—without much data about the long-term effect of laser treatment on eyes. The reason for this is obvious: there is a tremendous profit potential. The equipment is expensive and the procedures are costly (though trending downward). Third-party reimbursement is not a factor, and downward pressure on pricing is almost nonexistent. Doctors often perform the procedures in shopping malls.

With a large number of patients, high advertising profile, high profit margin, and little long-term experience, the laser eye surgery market is ripe for product-liability claims. As competition among companies intensifies, firms adopt aggressive marketing strategies to attract patients. Claims of superior outcomes, statements such as "Throw away your glasses," and "20/20 vision or your money back," and the use of celebrity and patient testimonials are just some of the tactics that LASIK-system manufacturers are using to boost sales.

While profitable, this kind of advertising poses risks. FDA and the Federal Trade Commission are closely watching advertising pertaining to LASIK and photorefractive keratectomy systems. Additionally, states have their own consumer protection laws designed to shield citizens from false and deceptive advertising. Many ophthalmic organizations have also developed guidelines for marketing refractive-surgery devices that are useful to both providers and patients. Failure to heed these laws and professional standards could land medical device manufacturers in hot water.

Even manufacturers of seemingly simple medical equipment and supplies must be careful in making advertising claims. A prime example of product-liability claims from promotion and advertising stems from the hypoallergenic labeling of latex gloves. As latex-glove use has increased in the healthcare industry in recent years, so too has the number of people who have developed latex protein toxic syndrome, a debilitating and sometimes life-threatening allergy linked to repeated exposure to latex gloves. FDA specially approved the hypoallergenic label via 510(k) clearance, and latex-glove manufacturers promoted it heavily. However, the agency later banned use of the term as being "misleading." Some product claims have dates of loss that predate FDA's ban on the term. The fraud or misrepresentation claim regarding hypoallergenic labeling has therefore become a paramount problem in latex-glove product-liability litigation.

An Ounce of Prevention

For medical device manufacturers, product-liability litigation can be a time-consuming and expensive process, as evidenced in the preceding section. The best way to avoid such litigation is to prevent it altogether (see sidebar). Following are some specific strategies that device manufacturers can use to prevent product-liability claims.

Review Web Sites. Medical device manufacturers should make sure that their Web content undergoes the same rigorous review process applied to written marketing and instructional literature. Many device companies neglect to review the advertising material posted on their Web sites, as such a forum provides for little interaction between manufacturers and customers.

To prevent the risk of product-liability claims, device companies should include on their Web sites a legal notice or disclaimer, along with prominent links alerting customers to the side effects, risks, and contraindications of their products.

Another factor for device manufacturers to consider is that many Web designers may not be as attuned to the technical accuracy of information as they are to making sites user-friendly and visually pleasing. Web sites may therefore be a hotbed of future medical product-
liability litigation.

During risk-management conferences involving medical device companies, product engineers are frequently asked to review the Web content of the devices they designed. The engineers are often astounded, as many of the Internet representations exceeded the company's statements to FDA regarding the product. To avoid such a scenario, device companies should meet with sales representatives and engineers to stave off any eventual conflict between the two groups.

Minimize Puffery. Device manufacturers should view every ad as a potential poster-sized blow-up exhibit in a courtroom. In addition, trials have gone multimedia, with plaintiff's attorneys routinely replaying audios in the courtroom. Manufacturers must be keenly aware of this every time they approve an ad. In other words, they should avoid puffery as much as possible.

There has always been a fine line between legitimate puffery and misleading advertising. To come right out and advertise that a product does something that it clearly does not do is obviously false advertising. In the medical device industry, the problem is more one of overstating a product's uses or benefits, or conveying an image inconsistent with the product's actual capabilities, than it is false advertising.

Consider Ford trucks—they are "Ford tough." Chevy is "like a rock." Such slogans do not really tell much about the products, but they convey the impression that there's nothing that couldn't be done in a Ford or Chevy pickup truck. It is legitimate puffery.

Generally, device manufacturers are better off promoting the specific benefits of their products only when they have clear evidence supporting those claims. Company executives should counsel their marketing professionals to underpromise and overdeliver.

Reassess Print Ads. Medical device manufacturers—even those making products of a nonprescription class—should include in their ads some cautionary language, even if that language is only "Consult your physician." Device manufacturers can expect to hear a plaintiff's lawyer suggesting that it was reasonable for his injured client to have expected warnings in the ads of any medical product.

Rethink Direct-to-Consumer Advertising. Medical device manufacturers must realize that direct-to-consumer ads weaken the learned-intermediary defense. This is the legal doctrine stating that manufacturers of prescription drugs and medical devices generally have no duty to warn consumers of hazards, side effects, or contraindications. Rather, their duty is only to adequately inform the prescribing physician—the learned intermediary—of such factors. It is then the physician's duty to communicate this information to the patient and obtain informed consent.

In the past, device manufacturers have claimed that they do not market to or directly warn consumers. These days, however, more and more medical device companies are advertising directly to consumers through print and television ads.

Device companies must be aware of the potential erosion of the protection of the learned-intermediary doctrine due to increased and aggressive advertising and promotions. With such heightened consumer advertising, a plaintiff's attorney could claim that the device company has waived the protection of the learned-intermediary doctrine.

Have Legal Counsel Preview Warnings. Device manufacturers must trust and rely on their attorneys and run all advertisements by them. Disclosure is the critical liability issue. Ads must disclose side effects and dangers, meaning that device companies must be comfortable with their ads playing in the courtroom before a jury in a bad product-liability claim.

However, ads should not be a substitute for appropriate, complete, and accurate warnings or instructions for use to physicians or healthcare providers who use the product. Moreover, ads should tell consumers to see a doctor, that the product may not be right for them, and that they may have contraindications to its use in their situation.

Medical device firms must try to maintain the benefits of the learned-intermediary defense, which is often the best defense in a warnings case. Device companies win product-liability cases on the warnings issue when they fully inform healthcare providers about all the device's risks. Juries are also impressed when instructions for use include all probable risks. Full disclosure to physicians is a must—and one of the best claim-prevention tools.

Train Sales Reps. Device manufacturers should recognize that litigation prevention includes salespeople, who must be properly trained on what to say, what not to say, and what not to promise. That is, they should know what is included in ads and not advocate off-label or inappropriate use contrary to an ad.

Make Warnings Prominent. The reality is that any advertisement may spawn lawsuits. Medical device firms can help themselves tremendously by prominently noting that prescription devices are just that—devices for which consumers need a prescription and a consultation with a doctor. Ads should therefore urge consumers to "ask your doctor if this product is right for you."

In addition, device companies should increase the type size for warnings in package inserts. This is especially true if the device is designed for the treatment of elderly people, who could easily miss small type.

Have Company Records Reflect Safety Factors. It is extremely important for medical device companies to check the corporate minutes in order to have them reflect safety factors. In doing so, they should ask the following questions.

• Was there an analysis of what proposed ads would cost in possible lawsuits versus the benefit of increased sales?
• During the cost-benefit discussion, was legal counsel present to protect its privileged nature?
• What have sales numbers been like since advertising directly to consumers went into effect?

Choose Product Names Carefully. Device manufacturers should exercise caution in naming their products, as many catchy marketing names can mean trouble in court. One memorable medical product advertising case involved an intrauterine device called the Safe-T-Coil. New York plaintiff's attorney Paul Rheingold referred to the device in court as "the medical device that carries an unequivocal guarantee of safety in its very name."

A Solid Defense

Even with the best prevention tools, however, some product-liability claims are bound to arise for medical device manufacturers. This section will therefore examine strategies that device manufacturers can use to defend liability claims from advertising and alleged overpromotion.

Tackle Allegations Head On. Device companies should make certain that their advertising is not false. This is of foremost importance, since building a strong defense against product-liability claims requires that satisfied customers and those prescribing the device be prepared to testify in favor of the following points.

• The advertising is true.
• The promotion was reasonable.
• The performance of the device has been satisfactory.

Medical device companies know they will see all the promotional material for the device displayed prominently before a jury and the court. Companies should therefore have articulate witnesses to justify that material.

Make a Good Product. Juries are favorably impressed when medical device manufacturers can produce evidence of the following.

• The product is necessary to the medical field.
• The design of the product meets specific criteria related to its use and the benefit of the patient.
• All requisite testing was performed before the product was marketed.
• The product saves or improves the quality of patients' lives.
• The field would be affected if the product were not on the market.

However, device companies cannot address these points credibly unless they can support their statements with sufficient data. Thus, companies need to document every step taken in product development—why patients need the product, what the product is intended to do, what the result will be with the development of the product, alternate designs, why the company picked one particular design over another, and all product-testing data.

Use Physician Testimony. Another effective way for medical device manufacturers to defend against product-liability claims is to use the learned-intermediary doctrine. If the court finds that this doctrine applies, the key for device manufacturers is to establish lines of communication with the doctor's counsel.

To do so, companies must find out if a physician who has prescribed the product will testify that he or she was fully aware of the product's risks and benefits, that he or she prescribed the product in spite of its risks, and that he or she decided which warnings to convey to the patient.

If the prescribing doctor gives this testimony, then the manufacturer's alleged activities—that is, overpromotion or false advertising—have no bearing on the issue. The beauty of the learned-intermediary doctrine is that if the prescribing doctor ignored or did not rely on the manufacturer's alleged actions, the manufacturer can argue that no causal connection exists between the alleged conduct and the injury.

Conclusion

Product-liability litigation can be a very expensive and time-consuming process for medical device manufacturers. Device companies should therefore calibrate their marketing strategies to avoid claims of overpromotion and hyped advertising. The best way for device manufacturers to do so is to track their advertising content and promotional materials, making sure that all claims can be substantiated and that warnings are given to consumers in plain view. These strategies should be part of a medical device company's risk management plan to bulletproof the company from claims arising out of advertising and overpromotion.

Kevin M. Quinley is senior vice president of Medmarc Insurance Group (Chantilly, VA).

Copyright ©2002 MX