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Chinese Medical Device Firms Urged to Upgrade Safety Standards Before New Liability Law’s Implementation

SHENZHEN, CHINA, April 20, 2010 - As China prepares to implement a new liability law on July 1, risk management experts urged more than 150 Chinese medical device executives to better protect their firms from litigation and regulatory risks. This was the key message at a seminar organized by the Chubb Group of Insurance Companies and sponsored by the China Association for the Medical Devices Industry (CAMDI).

"Chinese medical device manufacturers need to prepare for a new tort liability that goes into effect on July 1," said Andre Dallaire, Chubb's chief executive for Greater China. "At the same time, it is important for them to implement risk management practices that help protect their access to markets in the United States and European Union, to which they export more than $3 billion in products."

"This seminar is timely in that it focuses on helping China's medical device companies meet quality standards and protect their business prospects through best practices, including the purchase of product liability insurance," said Jiang Feng, chairman of CAMDI.

The new Chinese tort liability law will hold companies that manufacture or distribute defective products that pose an unreasonable danger to the health and safety of consumers liable for resulting injuries.  Both compensatory and punitive damages will be possible under the law.

"Historically, many Chinese medical device manufacturers purchased product liability insurance for export sales, and even then only when required by contract.  The new tort liability law will make it necessary to rethink this practice," said Frank Goudsmit, vice president of Chubb & Son and international life sciences manager for Chubb.

Goudsmit also advised manufacturers to implement or expand best practices to reduce their clinical trial litigation exposure. These include:

  • testing informed consent documents to make sure that participants will understand the risks; 
  • providing adequate disclosure of potential conflicts of interest of that can be construed as impairing an investigator's judgment;
  • assuring that clinical investigators, clinical research organizations and ethics committees have the proper training, accreditation, experience, expertise and workload capacity for the study and that their compliance records are satisfactory;
  • writing fair and balanced contracts in which the manufacturer does not assume liabilities for matters outside its control; and
  • tracking how a product is being used in the marketplace and communicating with doctors about adverse trends.

 

"Juries want to see that companies are actively monitoring the use and adverse reactions of the product and taking action when necessary, not just sitting back and collecting the sales revenues," said Goudsmit. "A plaintiff attorney will have a hard time successfully attacking a company that does these and other things well."

The member insurers of the Chubb Group of Insurance Companies form a multibillion dollar organization providing property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb's global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia. For more information, visit www.chubb.com.