The latest trend in the business of medical devices? Risk-sharing between device makers and those on the liability hook when something goes wrong, typically hospitals and insurers.

Such novel arrangements are surfacing in many different health care areas, including orthopedics, infection management and cardiology, according to a recent Reuters report.

Leaders of this new guarantee initiative include Medtronic, Johnson & Johnson and St. Jude Medical. Orthopedic device makers are also considering similar protection for hip and knee implants.
A combination of a number of market forces, including slowing sales, pressure from evidence-based medicine approaches that demand that the usefulness of devices be established, and increasing consumer pressure when a procedure goes wrong has led to the new approach, which could ease the compensation pressure on U.S. hospitals and insurers, including Medicare, and boost acceptance of new technologies - and sales.

Companies have also been faced with billions of dollars of settlements over problems stemming from the use of their devices. And the liability exposure does not look like it will diminish going forward. For example, in March, the Court of Justice of the European Union (CJEU) found that in a situation in which a medical device has a potential defect, all products of the same model may be classified as defective, with no need to necessarily show that in a specific individual patient the device is faulty, according to legal site A&L Goodbody, based on an InfoCuria case report.

This means that a device maker could potentially have to cover replacement of every product implanted in order "to restore the level of safety which a person is entitled to expect," noted the site.

Without referencing the recent European ruling, the latest report cites numerous industry sources who state that this new risk-sharing is a coming trend. The shift is "big," according to Susan DeVore, chief executive of hospital contracting negotiator Premier Inc., noting to the news agency that "the world is changing.”

At present the guarantees don't spell out the details of compensations, but executives told the news agency that once such arrangements are common, it's expected that the details will be ironed out.

Not everyone is happy with the present vagueness of these new agreements. Consumers Union’s Safe Patient Project Director Lisa McGiffert told the news agency that she would consider these moves of much greater value if companies "would come right out and say I will pay for the product and the replacement if something goes wrong.”

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