Researching and developing a medical breakthrough is easy when you compare it to the process of getting approval from the U.S. Food and Drug Administration. The FDA had a long list of requirements to reach and maintain compliance, and it’s not a cheap or easy process. Failing to do so, however, can cost your company $5 million dollars each day.
That’s right – it’s an expense that can’t be ignored, because lives are literally at risk. Every minute a defective product remains on the market is another opportunity to for someone to be injured or killed. You literally can’t afford to delay when the need for a recall arises.
This guide will walk you through everything you need to know about FDA compliance, the costs of warranties and recalls, and how European regulators are beginning to affect American companies. Here’s everything you need to know about the real cost of medical recalls.
Understanding FDA Compliance
The FDA is the federal regulatory body responsible for keeping Americans safe from defective or unscrupulous medical practices. Essentially, they make sure you’re not selling snake oil, and they do it by monitoring three key areas:
- Product Recalls (i.e. pharmaceuticals, medical device, etc.)
- Data Transparency
- Product Quality
The full regulations and requirements to maintain this compliance is outlined in Title 21, Chapter I, Subchapter H of the Code of Federal Regulations. Medical devices require specific controls during product development to avoid potentially dangerous and expensive recalls. This includes documenting and cataloging all design history files, receiving the appropriate approvals throughout each step, validating efficacy, and documenting all responsible suppliers and third parties.
Because the development process requires so much FDA intervention, development lifecycles can stretch out for years. The average turnaround time reported is 320 days (nearly one full year). The more prepared you are up front, the faster and easier the process will go. If a medical device fails to meet regulations, it can be a full year before the company can take another shot.
This makes it easier for the competition to catch up and remove your first-mover advantage on any breakthroughs. You no longer have a head start and can lose valuable ground. This is why you need everything organized and ready before applying with the FDA. Even if you do it right, you may face an FDA recall, and that’s a pricy proposition. Let’s do the math right now.
Calculating the Cost of Product Recalls
Pursuing quality products from the start is the ultimate goal of any medical device manufacturer. According to American management consulting firm McKinsey, a single warranty or recall process can cost a manufacturer up to $600 million. This doesn’t include the costs of lawsuits and other issues associated with the recall. In fact, the total cost to the medical device industry is up to $5 billion per year.
That’s not even counting the credibility costs. When consumers hear about a recall, they associate your brand with mistakes. Confidence drops from both consumers and investors, driving revenues and stock prices to drop. In fact, this same McKinsey study documented a 13% drop in stock prices across the industry from device recalls. Whenever a company’s name is attached to these recalls, it suffers in brand equity.
And this is just the financials.
The reason medical devices are so tightly regulated is because lives are literally at risk. A malfunctioning medical device can cause physical injury up to death. Imagine a necessary pacemaker is compromised and the patient can no longer breathe. In 2009, there were 28,049 injuries reported due to defective medical devices. With medical devices becoming more prolific, it’s vital that we all do everything we can to stem the danger. Of course, that’s easier said than done.
A Better Way to Manage Medical Device Recalls
Maintaining FDA compliance (and patient safety) needs to be an ongoing part of every healthcare company’s business processes. It can require a hefty investment in technology you may not have the resources for. Executing a medical device recall involves a lot of moving parts, none of which can be ignored.
All affected patients, external suppliers, internal stakeholders, and the FDA need to be kept informed of any updates. Creating an assembly line process in a centrally tracked database is necessary, and you need it to be scalable on demand.
That’s where Trievr comes in – our digital recall management solution helps maintain regulatory compliance in a template. You can customize our out-the-box platform to fit any need you have, including contact via email or physical postcard, real-time reporting, and even a hosted toll-free hotline for consumers. We can help manage all aspects of your recall process.
Contact Trievr to try a free trial today.