Recent developments in Medical Devices Law in Ireland and the Impact of the EU Representative Actions for the Protection of the Collective Interests of Consumers 2020/1828

The Medical Device Regulation (EU) 2017/745 (MDR) has been in force since 26 May 2021 and the In Vitro Diagnostic Medical Devices Regulation (EU) 2017/746 (IVDR) belatedly became applicable throughout the European Union on 26 May 2022. 

The EU Directive on Representative Actions for the protection of the collective interests of consumers 2020/1828 (the Directive) is due to be transposed into Irish law by 25 December 2022 and operational by 25 June 2023. There is now a clearer picture as to how the Directive will operate Ireland following the publication of the draft General Scheme of the Representative Actions for the Protection of the Collective Interest of Consumers Bill 2022, which will transpose the Directive into Irish law. 

MDR

The MDR was introduced to ensure a high standard of safety and quality for medical devices that are produced in, or supplied to, member countries of the European Union. This regulatory framework is intended to better identify medical devices, as well as standardizing data and technological advances through an EU database (Eudamed). The MDR places stricter requirements on clinical evaluation and post-market clinical follow-up, and imposes enhanced requirements regarding traceability of devices throughout the supply chain. 

The MDR has broadened the definition of devices that fall under its regime and software is now included in its remit. In order to qualify software as a medical device it must be able to interpret data and assist in making diagnoses while providing advice on therapies. 

This is of particular interest given the importance of technology in the global healthcare community. For example, software that uses imaging data to track the size of growths to decipher the risk of melanoma cancer or software that allows a phone to view images obtained from a magnetic resonance imaging (MRI) medical device for the purposes of diagnosing a disease or illness would be considered as a medical device. 

Due to potential onerous obligations, manufacturers need to give careful consideration to the distinction between wellness products and medical devices to ensure that they are compliant with the relevant regulatory regimes.  For example, an organisation considering entering the wearable health device market must decide whether or not it intends on becoming regulated as a medical device manufacturer. 

When assessing the status of a product, the manufacturer’s intended use of the product and the presence or absence of a “specific medical purpose” per the definition of a medical device under Article 2 of the MDR will be central to this decision. For example, it has become increasingly common to use non-traditional medical software, such as smart sports watches which are capable of measuring heart rates. If a smart watch manufacturer claims that its product has the facility to diagnose a heart issue then the product would be considered to be a medical device and fall under the MDR regime.  However, if the intended purpose of the product was to solely provide heart rate information to a wearer, then the MDR would not be applicable. In this regard, the EU’s Manual on Borderline and Classification in the Community Regulatory Framework for Medical Devices and EU’s Guidance on Qualification and Classification of Software in Regulation (EU) 2017/745 MDR have been of assistance to practitioners and manufacturers alike.

A classification of a product under the MDR may result in a preliminary requirement for CE marking, further detailed clinical evidence and would involve obligations for manufacturers, importers, distributors and healthcare institutions alike. 

IVDR

The IVDR has also increased its regulatory remit and now includes a broad range of in vitro diagnostics, from self-tests for pregnancy and blood glucose tests for diabetics, to sophisticated diagnoses performed in clinical laboratories. Other examples of IVDs are HIV tests or COVID-19 tests. The definition also includes software which is specifically intended to be used for a purpose, as set out in the definition of an IVD. Software is therefore considered IVDR software if it is intended to be used (alone or in combination) for the examination of specimens derived from the human body to provide information on physiological or pathological processes, predisposition of diseases and/or to predict treatment responses. For example, software within a PAP stain automated cervical cytology screening system, intended to classify the PAP cervical smear as either normal or suspicious, is covered by the IVDR. However, software used for general purposes, even in a healthcare setting or for well-being purposes, will not meet the definition of an IVD. For example, a laboratory information system is not considered IVDR software as it is merely a storage system. However, any addition to the system that performs calculations that exceed basic operations may be considered an IVDR software module.

IVDs may also be used in precision medicine when taking into account individual variability to identify patients who are likely to benefit from particular treatments or therapies. This could include next generation sequencing tests, which scan a person’s DNA to detect any genomic variations.

The IVDR spells out concrete minimum requirements for software and there will now be 20 general safety and performance requirements for IVDs. 

Manufacturers must conduct a conformity assessment procedure before they draw up a declaration of conformity and affix a CE marking. Manufacturers must keep up to date technical documentation with more than 50 specific elements defining its content. Unique device identifiers (UDI) are now required for each IVD, and information such as content on labels or promotional materials is now required.

EU importers now have a responsibility to ensure that they only place IVDR-compliant IVDs on the EU market, and emphasis has been placed on the recording of complaints, recalls and withdrawals. There is a further obligation of cooperation in order to mitigate potential hazards caused by medical devices. Distributors are required to meet similar verification requirements and to ensure complaints are managed appropriately. 

Under the MDR and IVDR, natural or legal persons may claim compensation for damage caused by a defective device. If the manufacturer of a device is not established in an EU member state and has not complied with its obligations set out therein, its authorised representative (which is defined as a person/company established in the EU who has received and accepted a written mandate from a non-EU based manufacturer to act on the manufacturer’s behalf in relation to specific tasks with regard to the manufacturer’s obligations under the MDR and IVDR) in the EU is legally liable on the same basis as, and jointly and severally with, the manufacturer (Article 11(5) MDR and IVDR). As such, it is to be anticipated that the new regulatory regimes will create an increased risk of litigation, especially for manufacturers.

Implementation of the MDR and IVDR in Ireland

In the Irish context, a number of Statutory Instruments have been introduced to assist with the transposition and implementation of the MDR and the IVDR. 

The Irish Medical Device Regulations 2021 (S.I. No 261 of 2021) ( the “2021 Regulations”) came into operation on 26 May 2021 and the European Union (Medical Devices and In Vitro Diagnostic Medical Devices) Regulations 2017 (S.I. No 547 of 2017) ( the “2017 Regulations”) designated the Health Products Regulatory Authority (HPRA) as the competent authority with responsibility for ensuring compliance with the requirements of the MDR in Ireland. 

The 2021 regulations have conferred specific functions and powers on the HPRA in order to carry out its role as the Irish competent authority for the MDR. The HPRA has been given significant enforcement powers to ensure compliance with the MDR to include investigation powers which will allow authorised officers to enter and inspect premises. Authorised officers may also serve a compliance notice on persons concerned, identifying instances of non-compliance with the requirements of the MDR and corrective actions to be taken within a specified timeframe, or a quarantine notice in respect of devices deemed to pose a serious risk to human health. Prohibition orders can also be served in cases of non-compliance with the requirements of the MDR, non-compliance with a compliance notice, or where a device presents an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health. 

Two new regulations were also enacted to strengthen the enforcement of IVDR. The In Vitro Diagnostic Regulations 2022 (S.I. 256 of 2022) (the "IVDR Regulations") and European Union (National Research Ethics Committees for Performance Studies of In Vitro Diagnostic Medical Devices) Regulations 2022 (S.I. 257 of 2022) (the "National IVDR Office Regulations") establish a range of offences for failure to implement IVDR and expand the role of the HPRA. 

The HPRA is given new powers of enforcement under the Irish IVDR Regulations 2022. An authorised officer of the HPRA can now enter premises, potentially accompanied by a member of the Irish police force, An Garda Síochána, if they have reasonable grounds to believe a business or activity connected with “any relevant thing or relevant service” is non-compliant with the IVDR. The HPRA may also issue notices and orders requiring corrective action be taken to comply with the IVDR. Enforcement proceedings may follow if such notices are not complied with in a satisfactory manner.

The IVDR Regulations establish a number of offences for non-compliance with IVDR. Manufacturers, authorised representatives, importers, distributors and organisers of performance studies can be prosecuted for the relevant offences on a summary basis or on indictment, and face sanctions of up to €300,000 and/or ten years' imprisonment. The offences include non-compliance with IVDR requirements involving compliance with safety and quality requirements before placing IVDs on the market, including during performance studies, and compliance with post-market surveillance requirements.

Enforcement powers for the HPRA are clearly far-reaching under the MDR and IVDR Regulations. As such, all economic operators that are subject to the MDR or the IVDR should familiarise themselves with the new Regulations to ensure compliance and avoid risk of prosecution.

EU Directive on Representative Actions 2020/1828 (the “Directive”)

The Directive aims to improve consumers’ access to justice by introducing a standardised EU wide legal mechanism by which consumers, who are affected by the same alleged infringements of EU law, can bring a representative action – also commonly referred to as a collective or group action - for injunctive relief and/or redress. 

The Irish Government recently published its draft General Scheme of the Representative Actions for the Protection of the Collective Interests of Consumers Bill 2022 (the “Draft Bill”) (the “Scheme”) to transpose the Directive into Irish law. Although the final legislation is likely to look different to the Draft Bill, it will nevertheless be novel as there are currently no comprehensive provisions in Irish Court rules for tackling group actions in a consistent manner. The mechanism currently available allows claims involving multiple claimants to be litigated as private and individual actions.

Once enacted, the Scheme will enable collective actions to be brought against businesses in a number of areas such as product liability, data protection and financial services. Examples in Ireland include the mis-selling of credit card protection policies to 160,000 domestic consumers.  As discussed further below, the  Scheme is likely to have implications for claims involving medical devices and consumer health products, given that until now claims involving these types of products have been brought as individual actions. Multiple litigants now have a vehicle by which they can join forces and bring a collective action in respect of the same product. 

The Bill giving effect to the Directive is at a very preliminary stage and will be subject to review and input by the Irish houses of parliament known as the Oireachtas. However, the Directive is required to be implemented into Irish law by 25 December 2022, with the resulting measures to be applied from June 2023 at the latest, and so the Bill will need to be considered and debated relatively quickly.

Qualified entities

The Directive will enable “Qualified Entities” to litigate representative actions aimed at the protection of the collective interests of consumers. 

In order to bring an action on behalf of affected customers under the Bill, a qualified entity must meet the following criteria:

• it must be properly constituted under Irish law and be able to demonstrate 12 months of public activity in the protection of consumer interests;
• it must show a legitimate interest in protecting consumer interests as provided in EU law;

• it must be non-profit making;
• it must be solvent;
• it must be independent; and
• it must publish information on its website in plain and intelligible language.  

Under the Bill the designation will be of indefinite duration, but subject to a five-year periodic review.  The specifics in relation to the designation process will be dealt with under Ministerial regulations.   

Costs and third-party funding

The Bill provides that the costs involved in bringing the representative action will be paid by the Qualified Entity. A consumer may be required to pay a "modest entry fee" to be represented by a Qualified Entity.  The Bill provides that orders for costs will continue to abide by the "loser pays" principle, as set out in the Legal Services Regulation Act 2015: ie, the losing party must pay the winning party’s costs. 

The Bill also makes provision for costs orders to be made against an individual consumer where their conduct results in a party incurring costs.  

The Bill does not alter the prohibition on third party funding. Third party litigation funding is currently unlawful in Ireland, except where it comes within limited exceptions to the rules against maintenance and champerty. The Draft Bill sets out that a representative action may be funded by a third party “insofar as is permitted under Irish law…”, but provides that such party must not influence the course of the action. This could indicate that changes to the ban on third party litigation funding may be under consideration, particularly as there has previously been calls for reform in this area. 

While the continued prohibition of third party funding under the Bill may deter qualified entities from bringing collective redress actions in Ireland, they will be permitted to bring cross-border actions in other Member States where third party funding is permitted, or to join in cross-border actions with other qualified entities if they have a branch or consumer domiciled in another Member State.

Redress

The Bill provides for both injunctive relief and monetary redress. A qualified entity may first seek an injunction to bring an end to an infringing activity, and may subsequently seek redress in separate proceedings. The Bill provides for the suspension of limitation periods during the injunctive stage, until a determination is made by the High Court. This could result in consumers joining a representative action at a stage where liability has essentially already been determined. 

Opt-in and opt-out systems

Member States are able choose between an opt-in system, an opt-out system or a combination of both. An opt-in system means that consumers would be required to express their wish to be represented by the qualified entity, while consumers in an opt-out system would be automatically represented by the qualified entity until they expressly state that they do not wish to be. 

Ireland appears to have selected an opt-in system. The Bill sets out that consumers affected by an alleged infringement of their consumer rights by a trader must opt in to a representative action for redress against that trader.  Consumers must notify the Qualified Entity of their wish to be represented before the defendant trader enters an appearance in the proceedings.  However, in representative actions for injunctive relief there is no requirement for consumers to opt in to the action under the Bill.

ADR and settlement agreements

The Bill allows for parties to engage in alternative dispute resolution and to settle any representative action. A settlement will be subject to the approval of the High Court and, if approved, it will be binding on the qualified entity, the trader and the individual consumers concerned. Under the Bill, the court will refuse approval of any settlement which contains terms which appear to be unfair.

Comment

The changes introduced by the Directive pave the way for large-scale class actions across the EU and there is a potential for pan-European medical device litigation for defects affecting products in circulation across multiple EU member states. We anticipate that this will have a major influence on how European law firms approach litigation risk going forward. In most of Europe, collective redress is a novel concept with significant legal uncertainties. 

Consumer associations across the EU are currently preparing themselves to bring claims once the Directive is in effect. Businesses are also taking steps to address where significant risk lies and to mitigate potential group claims before the deadline for transposition on 25 December 2022. 

For Ireland, where consumers are not yet able to effectively access collective or group redress, the Draft Bill is an important step towards the development of a coherent collective action regime to enable better redress for consumers. It is also likely to act as a gateway for Irish consumers to engage in collective redress for the first time from a country where a substantial tradition of collective actions had not previously existed.