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Pharmaceutical and medical device recalls - Statistics & Facts

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. In such a case 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, and in Q1 2018 alone, for example, 84 companies in the U.S. reported at least one recall. For pharmaceutical companies, the cost of the actual recall is not even the most costly aspect of recalls. Around half of pharmaceutical product recall costs result from the subsequent interruption to business that the recall causes.

The pharmaceutical industry is monitored by the Food and Drug Administration (FDA), which promotes public health by regulating the industry and by approving drugs. However, as regulations change and research and technology improve, drugs once approved by the FDA have been forced to be recalled. For example, the prescription acne drug Accutane was on the market for 27 years until it was discontinued and recalled in 2009.

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.

In addition to poor manufacturing practices, or selling drug products that fail to meet FDA standards and practices, the pharmaceutical industry has been accused of other violations, including overcharging government health programs, unlawful promotion, kickbacks, and monopoly practices. In fact, between 1991 and 2017 the pharmaceutical industry paid 11.3 billion U.S. dollars in financial penalties for unlawful promotion practices alone.

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