All about product liability in Canadian pharma. Prepared in association with Fasken, a leading global law firm, this is an extract from The Pharma Legal Handbook: Canada, available to purchase here for USD 99.
1. What types of liability are recognized in your jurisdiction?
In general terms, product liability arises from claims in contract or civil wrongs under the common law or civil code, depending on the province. Plaintiffs can hold manufacturers concurrently liable in either contract or civil wrongs.
- Contractual Liability
Plaintiffs that are party to a contract with a defendant manufacturer may make a claim in contract. In contract law, plaintiffs can enforce express terms or terms implied from legislation, trade practice, and custom against defendant manufacturers. Common law provinces have enacted legislation requiring manufacturers to provide warranties of product quality and fitness, and the Civil Code of Québec requires manufacturers to provide a warranty of quality, including a warranty against latent defects. Consumer protection acts across Canada further legislate into consumer contracts implied terms of description, fitness, merchantability, and durability of the product, and provide consumers additional remedies for false, misleading, or deceptive representations.
- Civil Liability
Plaintiffs not party to a contract must claim under a civil wrong. Common law plaintiffs can claim under the tort of negligence. Specific claims include negligent manufacture of a product, negligent design of a product, or the failure to warn users of product dangers. Negligence claims require proof that the product was defective, that the defendant owed a duty of care to the plaintiff, that the defendant negligently breached the standard of care with respect to the product, that the plaintiff’s damages were foreseeable, and that the defect caused or contributed to the plaintiff’s damages. Québec plaintiffs can claim under a special liability regime in the Civil Code of Québec that protects against safety defects, such as defects in design, manufacture, or preservation, as well as the lack of sufficient instructions, safety precautions, or warnings. This regime requires no proof of negligence. Plaintiffs need only prove the existence of the product’s safety defect, the damage suffered, and a causal link between the two to hold the manufacturer liable.
2. How do these types of liabilities apply to the manufacturers of medicines and devices?
Contractual liability typically applies after the purchase of medicines or medical devices which involve a contract of sale containing express and implied terms, including warranties. Civil liability applies after the purchase of medicines or medical devices and extends past the original purchaser to third parties users who are harmed by the use of the medicine or device.
Manufacturers owe a duty of care to users for the quality, efficacy, and safety of the medicines or devices. Medicines or devices must provide their purported medical effects to users, and must not be noxious. Manufacturers also have a duty to warn users of any risks or dangers that their medicines or devices might pose. These obligations continue throughout all stages of a medicine or device, and manufacturers must update their scientific knowledge and report newly discovered risks. The standard of care is very high for pharmaceutical manufacturers. The standard is informed by industry practice, legislation, regulation, and other codes of conduct, compliance with which is not a bar to civil court proceedings.
3. Does potential liability extend to the manufacturer only or could claims extend to corporate executives, employees, and representatives?
Potential civil liability extends to almost all participants in the chain of production, including manufacturers, distributors, retailers, wholesalers and importers. Participants may be held liable for claims in negligence or breach of contract as well as under Québec’s warranty provisions on product quality and the special regime concerning safety defects. Any persons who distribute products under their own name or as their own are bound to provide the warranties prescribed by legislation, custom, or trade practice.
4. How can a liability claim be brought?
- Class Actions
Class actions are permitted in every Canadian province except Prince Edward Island. Before proceeding to trial, class actions must be certified. In general, claims must raise common issues, the representative claimant must adequately represent the interests of the class, and the class action must be the preferable procedure.
- Limitation or Prescription Periods
Most common law provinces require proceedings to commence within two years from the discovery of a product liability claim. In most cases, the discovery date is the date the product allegedly fails or causes harm, but this period can be extended if the claimant is not aware of, and could not reasonably have discovered, the identities of potential defendants at the time. In Québec, the prescription period is generally three years. For breach of the legal warranty of quality, the period begins from the time the buyer becomes aware of the defect.
5. What defenses are available?
Defendants can always assert that plaintiffs have not established the requisite elements of a claim. Additionally, plaintiffs can advance defenses that include, among others:
- Contributory negligence, such as such as the plaintiff failing to observe warnings of risk, and abnormally or improperly using, maintaining, or modifying the product;
- The plaintiff’s voluntary assumption of risk, by contractual waiver or by previous awareness of the risk;
- An unforeseeable intervening act (or superior force) that caused or contributed to the plaintiff’s injury; and,
- The insufficient state of scientific knowledge at the time of the product’s manufacture, distribution, or supply, due to which the potential for harm could not have been known.