Medmarc - Insurance for the Life Sciences and Medical Device Industry | L360-07 - Crisis Management: Steps You Can Take Now to Be Prepared, Part II

This second installment of the “Crisis Management” segment of our Litigation 360 series addresses actions that a life sciences company can take immediately following notice of an adverse event to ensure the most positive outcome or least disruptive resolution. Although a company may not be able to undertake these steps until the event has occurred, preparation is no less important as pre-established procedures should be in place to provide a roadmap to follow in the wake of an adverse event. This article explores what those procedures should look like and what companies should devote attention to when preparing for and resolving an adverse event involving their products.

Product Identification: Determining Whether Your Product Was Involved

When a type of product is manufactured by multiple companies, it is not uncommon for adverse events to be reported to the wrong manufacturer. The injured party simply misidentifies the manufacturer and reports the injury to the manufacturer of a similar product. When learning of an adverse event, a company should first ensure that the product that gave rise to the alleged injury is, in fact, their product. There have been instances when companies have failed to make that determination and have litigated products liability cases only to discover that the product at issue was made by a competitor. 

The recently enacted regulations requiring the manufacturers of medical devices to assign each device a Unique Device Identifier (UDI) will assist this process, though most manufacturers will not have to comply with this requirement for several years and some products are exempt from the rule. (See 21 CFR 830.)

If product identification is a potential issue for you, begin to address it now by doing the following:

• Ensure the traceability of your products. In most instances, questions about a product’s origination can be answered by business records (or a lack thereof) that trace the product’s path from the manufacturing facility, through its distribution chain, and into the hands of the end user. For example, a manufacturer that keeps excellent records that document the sale of its products will be able to demonstrate that they are used in certain hospital systems but not in others. Where the adverse event occurs and whether the manufacturer does business with the facility as demonstrated by its records can be determinative in the product identification process. On the other hand, manufacturers that sell their products widely and without documenting where they end up have a tougher time determining whether the product is theirs. For this reason, evaluate (and enhance, if necessary) your record keeping practices to ensure that your documents demonstrate your product’s “traceability” in the marketplace.
• Ease product identification with a distinctive look or feature. If your product looks similar to those manufactured by your competitor, consider adding distinctive features to your product to assist with its recognition. Numerous companies make home mobility aid devices, for example, that often look alike. The company that distinguishes its products from those of other manufacturers by displaying its indelible logo will have an easier time determining whether the product involved in the adverse event is theirs.
• Research your competitors’ products. Additionally, general knowledge about your competitor’s product--where it is sold and distinctive differences in its functionality or mechanics compared to your product--will be useful to the identification process as well. Understanding now the difference between their products and yours can save you time in a crisis when the speedy and accurate identification of your product is critical.

Returned Product: Receiving and Handling the Product Involved in the Adverse Event

Depending on the type of product at issue, products involved in alleged adverse events may be returned to their manufacturers by end-users. When products are not returned to their manufacturers, companies should seek their recovery, though this may be difficult for the manufacturers of some products, such as over-the-counter products, implants, and drugs. Obtaining the product involved in an adverse event is extremely useful when investigating the incident, and it can be critical in a manufacturer’s defense when the adverse event gives rise to a products liability lawsuit.

Most companies have “returned goods authorization” (RGA) protocols for products being returned under any circumstances, but these protocols are likely not sufficient to handle the return of products involved in adverse events. Standard RGA protocols simply do not require the type of product inspection that is necessary under the circumstances, nor do they address preserving the products in their returned conditions. For this reason, companies should consider implementing procedures intended to be used under these special circumstances.

Should an adverse event lead to a lawsuit, you may be required to produce the device involved, assuming that it has been returned to you. Failure to do so may be considered “spoliation of evidence,” or the intentional or negligent withholding, hiding, altering, or destroying of evidence relevant to a legal proceeding, which can result in court-imposed sanctions. Preventing a spoliation claim is another good reason to develop procedures related to handling products involved in adverse events. Should a lawsuit arise, anticipate that one of the first things your legal counsel will do is assist you with notifying your employees of the need to retain pertinent evidence, including the returned device involved in the plaintiff’s alleged injury.

A procedure for returned goods involved in adverse events should do the following:

• Document the chain of custody. It is important to create a “chain of custody” for the returned product, which is a written, chronological record that demonstrates who has had contact with or control over the product upon its return, what was done to it, and how it has been handled and stored since its recovery. Be sure to document the time, date, and manner of receipt of the product as well as the corresponding incident in which it was involved.
• Include product inspection protocols that restrict destructive testing. It is also important to keep the product in the condition in which it was returned. In some instances, a company will have to test the returned product as part of the adverse event investigation. Whenever possible, avoid destructive testing. Beyond spoliation, being able to produce the product in the event of litigation can be an important part of your defense. Build protocols around testing procedures and consult with legal, regulatory, R&D, and your manufacturing departments to determine the best approaches to testing. Be sure to consider how long you will need to preserve the product--which is usually until the related claim has been settled or the statute of limitations has elapsed.
• Create methods for recording the condition of product upon its arrival at your facility and any inspection results. If it is possible to inspect the product upon its return without altering its post-adverse-event condition, perform an inspection and document your findings. In general, among other product-specific factors, relevant to the inspection are whether all of the product components are intact, the overall condition of the product, and any modifications that appear to have been made to it. Also make a note of any indications of how the product has been used. For example, if the product is a device, does it have an alarm function, and has the alarm been armed or disabled? Or, can you determine the operating mode in which the device was last used?
• Consider the appropriate manner of storage. Given that you may have to hold onto the product for some time, take care to store the product in a manner that will prevent its degradation. Talk to those with technical knowledge about the
  product and take into consideration space or temperature requirements in order to assure successful preservation.

Media and Press: Protecting Your Reputation

In the previous edition of Litigation 360, we discussed the importance of communicating with the public during a crisis that involves your product. Providing information about the product and its safe use can be essential to protecting the public’s health. However, remember that any public statements that you make about your product or about any related adverse events, post-market corrective actions, or legal actions can haunt you during litigation should your messaging and your interactions with the media not be well managed. Having a written procedure in place that anticipates this aspect of a crisis and describes how you will address questions from the public can help assure that you respond appropriately.

All information you provide to the media--even the information you develop during the crisis--should undergo legal review to ensure that none of it compromises your legal case or discloses anything confidential. Certain information about your company and product will be relevant to any media inquiry. This sort of information can be prepared in advance of a crisis when there is plenty of time for legal review. For example, you may wish to prepare a company “fact sheet” or contact sheets for individuals who are authorized to act as media liaisons.

A company may choose to create a “media team” that is responsible for managing communications during a crisis. The team should be composed of individuals from a cross section of the company, including management, marketing, legal, regulatory, quality, and operations. Additionally, include someone from the information technology department to ensure that messages can be deployed electronically. Written procedures should specify the scope of the team’s responsibilities and authority and require their availability around-the-clock until the crisis is resolved. As part of its regular activities, the team should test and evaluate the procedures on an ongoing basis to ensure that they continue to be appropriate for and relevant to your business.

Products Liability Lawsuits: Responding When You Receive Notice of the Lawsuit

An adverse event that gives rise to a products liability lawsuit brings a host of additional requirements and obligations necessary to see it to resolution. Time is of the essence. If a lawsuit is filed, you have a certain amount of time in which to respond, depending on the jurisdiction in which it has been filed. Your first step should be to inform your insurance broker and your products liability carrier. In the next edition of Litigation 360, we will take a closer look at the things that a company should do immediately after a lawsuit materializes in order to mitigate the impact that the lawsuit will have on the company and to assist its defense.

Conclusion

Adverse events are nearly inevitable for most life sciences manufacturers. However, their impact need not be overwhelming or injurious to a company’s reputation, personnel, or bottom line. Instead, by utilizing the information provided in these last two installments of Litigation 360, life sciences companies can minimize the negative effects of adverse events and manage them appropriately to prevent larger-scale product problems down the line. The critical piece of an effective strategy for handling adverse events is preparation; the best outcomes are assured by drafting and enacting those procedures that will guide action in the event of an adverse product experience before such an event occurs.