A product recall occurs when safety issues or defects in a product are found that might endanger consumers, or put the producer or seller at risk of legal action. When this happens, the product is taken off the market resulting in financial loss for the producing company and potential damage to the company’s reputation.

Product recalls in the pharmaceutical industry are not rare. For example, in the first quarter of 2018, 84 companies in the U.S. reported at least one recall. For pharmaceutical companies, the cost of the actual recall is not the most costly aspect of recalls. Around half of pharmaceutical product recall costs result from the subsequent interruption to business that the recall causes.

Similarly, medical devices are also regularly recalled, with the main cause of recalls involving software and quality issues. In FY 2017 alone, the FDA inspected 2,652 establishments where medical devices were manufactured, processed, packed, installed, used, implanted or where records of results from use of such devices were kept. Furthermore, the FDA issues Warning Letters to companies concerning medical devices and potential problems associated with them.

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