REGULATORY COMPLIANCE DEFENCE IN EUROPE Mark Mildred Nottingham Trent University

THE EXISTING LAW PL Directive: article 7(d) defence that “The defect due to compliance of the product with mandatory regulations issued by the public authorities” CPA s 4(1)(a): “that the defect is attributable to compliance with any requirement imposed by or under an enactment or with any Community obligation”

CASES No reported cases (?) Gammagard 1994 Immunoglobulin used in primary immuno- deficiency Contaminated with hepatitis C virus Said to be as a result of manufacturing process mandated by FDA

THIRD REPORT ON PL DIRECTIVE COM(2006) 496 final, 14 September 2006 “Some stakeholders, and in particular representatives of the pharmaceutical industry, have argued strongly for the introduction of a defence of regulatory compliance, which would apply to a product whose safety was closely regulated, provided that the product complied fully with the applicable regulations” (page 11).

REASONS FOR A RC DEFENCE Certainty for all Avoiding: failed claims And irrecoverable transaction costs (both sides) And payment of damages And waste of management time And suppression of innovation Promoting: lower premia so lower prices And research for new products Licensing Authority (“LA”) best judge of entitled expectation

PRACTICAL REASONS AGAINST RC DEFENCE Few successful claims Discipline of risk-based claimants’ funding Adequate, stable and affordable insurance cover available No evidence that innovation is suppressed

PRINCIPLED REASONS AGAINST RC DEFENCE Potential errors of LA Inadequate disclosure to LA Premature disclosure to LA Continuing disclosure to LA (PMS) Making those decisions justiciable ? Leads to slower, more conservative licensing process with social costs

PRINCIPLED REASONS AGAINST RC DEFENCE Satellite litigation over disclosure process Or raised in main claim where LA has no locus What would be ambit of defence? Which products/industries are “closely regulated”? Necessity (and difficulty) of amending PLD Undermining fair apportionment of risk

A PLACE FOR PRE-EMPTION? Would EMEA mandate product information for all member states? Cumbersome and ?inappropriate Amend art 7(a) to provide defence where product marketed with mandated info? In US pre-emption limited to failure to warn Difficulty over categorisation of defect and ? cause of action