Manufacturers of Direct-to-Consumer Digital Medical Products Face New Liability Risks

A transformative shift is underway in the life sciences sector, particularly regarding digital health products. Increasingly, life science companies are moving beyond developing medical technology solely for healthcare providers. Their focus now includes developing, marketing, and selling digital products directly to patients as consumers. Diagnostic tools such as self-administered glucose monitors, wearable electrocardiograms, and other self-administered tests, monitors, and therapies are increasingly common.

In a prior post, we highlighted the operational challenges faced by life science companies transitioning into a direct-to-consumer (DTC) business model. Chief among these is the need to establish efficient and compliant systems for distributing products to thousands of consumers across diverse locations, moving away from the traditional model of selling digital health products to medical providers for patient use. This new on-demand, digitized ecosystem promises improved access and more personalized medicine for consumers.

However, entering this expanding market introduces a new set of liability risks for life science companies. These risks primarily arise from two factors:

• Direct Responsibility for Consumer Education: Companies selling digital health products directly to consumers can no longer rely exclusively on medical providers to serve as intermediaries. These companies assume the responsibility, at least in part, of explaining medical tests, procedures, and associated risks to lay users.
• Technical and Legal Complexity: The development and manufacture of these products, and the need for integration and compatibility with medical record systems, can result in complex and costly litigation if technology issues arise.

Digital devices sold directly to consumers operate outside of the clinical pathway inherent in the doctor-patient relationship. Unlike traditional medicine, where diagnostic and therapeutic decisions are made in a clinical setting, self-administered digital diagnostic tests are often performed without direct medical oversight. There’s a possibility that results may be misinterpreted or acted upon without guidance, as consumers may lack the technical background to understand risks, interpret results, or evaluate the clinical relevance of available options. For example, a consumer who self-administers an ECG test and detects an irregular heart rhythm may act on the result alone, making significant lifestyle or dietary changes without medical consultation. If harm results—whether from the consumer’s actions or inactions—the consumer may look to the seller or manufacturer of the test for recovery.

The risk is elevated for DTC products that make explicit claims about wellness and lifestyle while also implying health benefits for serious medical conditions. For example, a fitness app or device might suggest benefits for consumers with cardiovascular risk. Individuals with advanced heart disease might then use the product unaware of potential harm.

A legal claim may still arise even if manufacturers provide clear explanations of test results and emphasize the need for medical consultation. Unlike liability claims brought by injured patients against healthcare providers for diagnostic or therapy products, claims alleging harm from DTC products are harder to defend. A key reason is the potential inapplicability of the “learned intermediary doctrine”—a traditional defense to legal liability for medical device manufacturers. This doctrine generally holds that a manufacturer’s duty is to warn the medical provider, rather than the end-user. It is based on the premise that the medical provider (e.g., physician) serves as an intermediary between the manufacturer and end-user. It is therefore the prescribing physician’s responsibility, and not the manufacturer’s, to provide adequate warnings to the patient. However, this defense may not be available to the manufacturer of a DTC product.

Technical complexities of digital medical devices also make liability claims alleging device malfunctions difficult and more costly to defend. The multifaceted nature of legal liability arising from device failures—which could be from design defects, manufacturing errors, software errors, or inadequate maintenance or user training—may require multiple experts and lead to complex and lengthy litigation. With thousands of devices across various jurisdictions, manufacturers face the increased risk of multi-party and multi-district litigation. Additionally, digital medical devices often interface with medical record systems, raising the risk of security breaches or glitches that could result in exposure of sensitive medical records and potentially lead to privacy claims.

Manufacturers of digital healthcare devices should carefully evaluate the potential for increased liability accompanying a DTC sales strategy. While it is critical to consult an attorney to assess legal risk, manufacturers may adopt general risk-mitigation strategies and practices, such as:

• Providing clear and appropriately worded disclaimers on products, websites, and advertisements;
• Explaining the limitations of digital tests;
• Encouraging consultation with the consumer’s physician;
• Crafting indemnification clauses and other contractual provisions to allocate or limit liability, especially for products incorporating software and other components;
• Limiting sales in jurisdictions with expansive liability laws;
• Securing insurance tailored to the unique risks of DTC digital health products, platforms, and tools.

While no approach can fully protect a company from exposure to liability, the careful application of risk management techniques and plans can make a valuable difference. 

Injuries, claims and lawsuits do occur when consumers are directly involved in purchasing and using medical devices. However, by staying vigilant, investing in robust risk mitigation strategies, and maintaining clear communication with consumers, manufacturers can better navigate and reduce risk in the evolving landscape of DTC digital health. Ultimately, a proactive and informed approach not only helps identify and mitigate liability risks but also fosters consumer trust and supports sustainable growth in this rapidly changing sector.

Authored by Derek Dow, Berkley Life Sciences, VP, Life Sciences Digital Health Leader