A recent EU directive will have significant consequences for Australian life sciences companies operating in Europe. Directive 2024/2853 (Directive) broadens the scope of the EU’s no-fault product liability regime and will assist European consumers in obtaining compensation from suppliers of defective pharma products and medical devices that are located outside of the EU. 

The Directive repeals Directive 85/374/EEC which had been in place for almost 40 years. Significantly, the Directive includes rebuttable presumptions that apply to technologically or scientifically complex products, including pharmaceuticals and medical devices that incorporate artificial intelligence. 

These presumptions will more significantly impact the life sciences industry than other industries because of the innovative nature of pharma products and medical devices, particularly where consumers may have previously struggled to prove that products were defective in order to recover compensation. 

It will be important for Australian pharma and medical device businesses operating in Europe to consider their potential exposure to increased liability for defective products under the Directive. The Directive also serves as an important reminder for these businesses to ensure that they comply with any applicable EU safety regulations given that the sale of pharma products and medical devices is heavily regulated in the EU. The Directive applies to products sold in the EU after 9 December 2026.

Modernisation of the EU’s no-fault liability regime 

The Directive applies to a broader range of products than the existing regime, including defective software (whether integrated in a product or supplied independently). In addition to death, personal injury and property damage, consumers can also now recover compensation for loss of data. 

The Directive recognises that the increasing use of global supply chains has made it harder for European consumers to recover compensation from manufacturers located outside of the EU. To address this, the Directive enables consumers to recover compensation from a broader range of operators, including from a manufacturer’s authorised representative in the EU and operators of online platforms (e.g. Amazon or eBay). 

The Directive requires courts to consider all circumstances relevant to the defect, including the ability of the product to continue to acquire new features, or whether the manufacturer retains control over the product after it is sold. This means that manufacturers can still be liable for defects caused by software updates that are pushed out remotely, or changes implemented by a continuous learning AI system. 

Disclosure obligations 

If a consumer establishes that their claim for compensation is plausible, a court can require a defendant to produce relevant evidence (to the extent that this disclosure is necessary and proportionate). Failure to produce this information can allow the consumer to rely on a presumption that the product is defective. 

Rebuttable presumptions – defectiveness and causation 

The Directive introduces rebuttable presumptions which reduce the evidentiary burden on consumers attempting to prove that a product was defective and that it caused damage. These presumptions may expose manufacturers of complex products (such as complex pharmaceuticals and innovative medical devices, particularly those that incorporate AI systems) to additional liability for defects. 

The defectiveness of a product will be presumed where: 

• The defendant (e.g. the supplier of the medical device) fails to provide evidence that they have been ordered to disclose; 
• The claimant establishes that the device does not comply with applicable safety standards; or 
• The claimant shows that the damage was the result of an obvious malfunction that occurred during the ordinary use of the device.

The causal link between the defectiveness of the product and the damage suffered by the claimant will be presumed where they have established that the product is defective, and the damage is consistent with the defect. 

A claimant can also rely on a presumption as to the defectiveness of the product and/or the causal link between the defectiveness and damage where: 

• The claimant faces excessive difficulty in proving these elements because of technical or scientific complexities; and
• The claimant demonstrates that it is likely that the product is defective, or that there is a causal link between the defect and the damage that they incurred. 

Next steps for Australian life sciences businesses 

The Directive may expose Australian pharmaceuticals and medical device businesses operating in Europe and their authorised representatives to additional liability for product defects. Australian life sciences businesses should consider the extent to which their products comply with EU safety standards and reassess their contractual arrangements with supply chain partners in Europe to mitigate this risk.