Want to know more about product liability in Swiss Pharma? Read on! Prepared in association with Wenger Plattner, a leading law firm in Switzerland, this is an extract from The Pharma Legal Handbook: Switzerland, available to purchase here for USD 99.
1. What types of liability are recognized in your jurisdiction?
Swiss law generally distinguishes between two types of liability: contractual and non-contractual. Contractual liability is governed by the section about breach of contract in the Swiss Code of Obligations (CO) (Art. 97 et seqq.).
Non-contractual liability is regulated on the one hand by the general tort law provisions of the CO (Art. 41 et seqq.) and on the other hand by provisions of special legislation.
In this latter regard, the most important special legislation to mention is the Swiss product liability law (PLL) which was enacted in 1993, based on the European Council Directive 85/374/EEC of 25 June 1985. This Swiss act sets out a liability for products which have caused physical injury to the body or the property of a person.
Generally, the liability extends to the compensation for the damage occurred. Additionally, according to the general tort law provisions, the aggrieved party is entitled to compensation for personal suffering. According to the prevailing opinion, such compensation could be claimed under the product liability law as well. However, the sums which Swiss courts award under this heading are insignificant.
Liability for bodily injury cannot be (contractually) excluded beforehand. This rule is explicitly mentioned in the product liability law (Art. 8 PLL), but it is recognized as well for the other two legal grounds for liability, the contractual one and the one under general tort law.
The prerequisites under which liability is established differ from one type to another:
- The contractual liability requires a contractual relationship between the party at fault and the injured party. In case of a sales contract, the seller will be automatically liable (strict liability) for any direct damage which the delivery of the defect product has caused (Art. 208 para 2 CO). For any further, i.e. indirect damage, the seller will be liable only if he can be held culpable (fault-based liability) for the defect of the product (Art. 208 para 3 CO). The delineation between direct and indirect damage has always been and remains very delicate. In its newer case law, the Swiss Federal Court has at least clarified that the fact alone that a damage only occurred when a product had been used according to the normal or agreed usage, does not render the damage an indirect one (Swiss Federal Court decision 133 II 257).
- The tort-based liability requires first of all that the action of the tortfeasor which caused the damage was unlawful. However, when a bodily harm or damage to physical property occurred, unlawfulness is automatically assumed. The second prerequisite is that the tortfeasor’s behavior was culpable (fault-based liability). Culpable behavior means that the tortfeasor acted (at least) negligently, that is, in defiance of his general duty of care.
- Under the product liability law, the manufacturer of a defect product is liable for the injury or dead of a person or for the damage or destruction of personally used property which this product has caused (Art. 1 PLL). Once the above requirements are fulfilled, the liability is triggered automatically and does not depend on any fault of the manufacturer (strict liability). (For the specific requirements of the product liability law, see question 2; for the potential defenses available under this law, see question no. 5.)
2. How do these types of liabilities apply to the manufacturers of medicines and devices?
If a medicine or a medical device has caused harm, the liability has to be examined under the three legal bases for liability introduced in question no. 1 above. In theory, these three legal grounds for liability coexist, that is, a three-fold liability could be established in one single case.
However, in cases in which a pharmaceutical product has caused physical harm to an end user (patient), both contractual liability and liability based on general tort law will hardly ever be relevant in the relationship between the manufacturer of the pharmaceutics and the patient: Contractual liability requires the existence of a contractual relation-ship, which is regularly not present, as pharmaceutical products are usually not sold from the manufacturer directly to the patient. Likewise, it will be difficult to prove a manufacturer’s culpable behavior, which would be necessary to hold him liable under general tort law.
On the other hand, the liability under the product liability law is “broader” as it does not require either of these two prerequisites (contract or fault). Therefore, in cases in which the product liability law is applicable, an examination of the other legal grounds for liability is usually redundant. For this reason, the rest of this chapter will now focus on the product liability law and disregard the contractual and the tort law liability.
Unlike certain other jurisdictions, Switzerland has (with few exceptions, e.g. during the stage of clinical trials, see in this regard chapter 6 question no. 6) not enacted any special legislation with regard to product liability for medicines and medical devices. Therefore, the liability for therapeutics will be examined under the general provisions of the product liability law.
The specific requirements of this law are as follows:
The bodily damage has to be brought about by a defect product. According to the legal definition of the law, the notion “product” is very broad. It encompasses every movable or part of a movable (Art. 3 PLL). Due to this wide application, nearly all medicine, even such that for example contain nano-materials or nano-particles, as well as all medical devices, will qualify as products within the meaning of the law.
Naturally, the core of every product liability is the notion of the defectiveness of the product – and at the same time the definition of this term is the most delicate one. Under the Swiss product liability law, a product is defect, if it does not provide for the security which one can legitimately expect (from it) in consideration of all circumstances (Art. 4 para 1 PLL).
In order for the definition to be as comprehensive as possible, the law ties in with the legitimate security expectations of the product and does not consider the type of the product or the type the defect. Nevertheless, the legal doctrine and courts often use the following three categories in order to classify the defect in a given case: the defect can typically be either in construction, in fabrication or in instruction.
These categories are also used when categorizing the defect in a pharmaceutical product. For example, the manufacturer of a pharmaceutical has to inform about its risks and side effects. Insufficient information can be a defect in instruction.
With the comprehensiveness of the definition comes along its vagueness. For example is it not completely clear whose legitimate security expectations have to be satisfied. The law speaks only of the security “one” can expect. The prevailing opinion is that the benchmark is the public at large, which includes a third person who is not necessarily the end user of the product.
With regard to medicines which are only available on prescription, the Swiss Federal Court has a few years ago adopted in a controversial decision the American “learned intermediary doctrine” (Swiss Federal Court decisions 4A_365/2014 and 4A_371/2014). According to this decision, medicines which are only available on prescription have to meet the expectations of the physician and not the ones of the patient. Therefore, when determining whether or not the hazard note of the manufacturer was complete enough, the decisive factor is the information which the manufacturer provides to the physician (the learned intermediary), rather than the package insert of the medicine which is available to the patient.
When determining the legitimate security expectation, the law stipulates that one has to account for all circumstances. The statute enumerates – not conclusively – certain circumstances which particularly have to be considered (Art. 4 para 1 PLL):
- The way in which the product was introduced to the public;
- The usage with which one can reasonably expect;
- The point in time at which it was put on the market.
When applying the “legitimate security expectations”-test to therapeutic products, several points have to be emphasized:
Firstly, it has to be remembered that therapeutic products are – per definition – not flawless as side effects can never be entirely precluded. Therefore, the legitimate security expectations of therapeutic products are never absolute. Rather, such security expectations are reduced from the outset and they have to be put in relation to the severity of the medical condition for which the product is used and to the chances of recovery it promises.
Secondly, the fact that therapeutic products may contain side effects and the security expectations one has on them is reflected in the procedure by which they are put on the market: To be sure, in Switzerland medicines and medical devices undergo a rigid authorization procedure and conformity assessment, respectively, before being put on the market. However, these tests base on a risk-benefit ratio and not on absolute certainty or safety. Generally, if this ratio is positive (i.e. the benefits outweighs the risk), the authorization or the conformity will be granted.
According to the case law of the Swiss Federal Court, the fact that a medicine was authorized to be placed on the market provides not more than a mere indication that it is fulfills the security expectations which are placed in it. However, its market authorization does not preclude the existence of a defect in the product (Swiss Federal Court deci-sions 4A_365/2014 and 4A_371/2014).
On the other hand, it has to be considered that some defects cannot be discovered in clinical tests with a limited number of study participants and they will only appear once the product is released on the market. If, however, in such a situation, the defect can be qualified as a development risk, the manufacturer will be released from liability (see below question no. 5).
Thirdly, medicine products can at best reflect the latest state of scientific knowledge and nothing more advanced can be reasonably expected. Certainly, this is true for any product and thus the statute itself clarifies in a general manner that a product shall not be deemed defective only because a better product was put on the market later (Art. 4 para 2 PLL).
If the defectiveness of a product is established (and provided that no defense is available, see question no. 5), the liability hits the manufacturer. According to the definition of the law, manufacturer is the person who has produced the end product as well as the persons(s) which have produced any part of it (Art. 2 para 1 a. PLL). Moreover, any person who impersonates the manufacturer by putting his own name or brand on the product as well as the importer are regarded as manufacturer under the law and are hence liable (Art. 2 para 1 b. and c. PLL).
3. Does potential liability extend to the manufacturer only or could claims extend to corporate executives, employees, and representatives?
According to the product liability law, the liability extends to the manufacturer only (for the persons who fall under this definition, see above question no. 2). A personal liability of the corporate executives, employees and representatives is excluded.
Under tort law, a liability of the corporate executives, employees and representatives is theoretically conceivable, though. Such personal liability, however, could only occur if a culpable conduct of the person involved could be established. This will only very rarely be the case.
4. How can a liability claim be brought?
Swiss law knows no special procedural rules for liability claims, rather the general procedural rules, especially the Swiss Civil Procedure Code (CPC), will apply for these types of claims. Therefore, a liability claim for therapeutic products, regardless of whether the liability is based on contract law, general tort law or specific product liability, has to be brought against the liable party in a normal civil claim.
The aggrieved party can choose out of four places of jurisdiction: At his own domicile, at the seat of the injuring party (the manufacturer), at the place where the damaging act occurred or where it had its effect (Art. 36 CPC).
The claimant has to prove all the prerequisites of his claim. Under the product liability law, he has particularly to prove the defectiveness of the product. The fact that in practice this prove is often hard to show, doesn’t result in a reversal of evidence to the disadvantage of the manufacturer (Swiss Federal Court decision 133 III 81).
The provisions about prescription period in the product liability law provide that claims have to be brought within 3 years from the moment that the claimant had or should have had knowledge of the damage, the defect and the identity of the manufacturer (Art. 9 PLL) and in any case within 10 years from the date when the product was first placed on the market (Art. 10 PLL).
5. What defenses are available?
The product liability law allows for several defenses, a few of which could be of particular interest in the context of liability claims against manufacturer of pharmaceutical products.
1. The manufacturer is not liable if he proves that the defect could not be detected according to the state of scientific knowledge at the time when the product was placed on the market (Art. 5 para 1 e. PLL).
This defense bases on the principle that a manufacturer should not be liable for development risks. Naturally, this defense is not a carte blanche for manufacturers not to exercise adequate care when developing pharmaceuticals.
According to the Swiss Federal Court, the state of scientific knowledge is to be assessed according to objective criteria, not according to the level of knowledge of a single manufacturer. However, only accessible knowledge and such that has been recognized by the concerned scientific community has to be considered. Isolated opinions don’t have to be taken into account, at least with regard to products which do not pose a specifically high danger for the population (Swiss Federal Court decision 137 III 226).
Conversely, this last statement of the Swiss Federal Court has been interpreted by some scholars that regarding pharmaceutics – which generally can pose an increased danger to humans – minority opinions in the scientific community do have to be considered by the manufacturer, who will otherwise not be able to use the “development risk”-defense.
2. Another defense is that the manufacturer is not liable if the defect stems from the fact that the product complies with mandatory state regulations (Art. 5 para 1 d. PLL). However, this – at first glance promising looking – defense can in fact hardly ever be available to a manufacturer of a pharmaceutic product. As aforementioned (question no. 2 above), the fact that a medicine received market authorization or that a medical device received conformity, does not preclude that the product is defective.
3. The last defense to mention is that the manufacturer is not liable if he did not put the pharmaceutic product on the market (Art. 5 para 1 a. PLL). With regard to pharmaceutical products, this defense has as well only a limited scope. E.g. during the phase of clinical tests, this defense will indeed relief the manufacturer from liability under the product liability law. However, during this phase, he is liable according to the rules of special legislation anyway (see chapter 6 question no. 6).