Why Product Recalls Cost Med Device Manufacturers $5,000,000 a day

Education / Why Product Recalls Cost Med Device Manufacturers $5,000,000 a day
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Summary: Med device recalls are both dangerous for patients and expensive for companies — which is why the FDA approval process can be so grueling. By leveraging digital solutions to track products through the product development lifecycle, companies can reduce the risk of recall and get to market faster. 


Breakthroughs in healthcare happen fast but can take years to hit the market. The reason? A little agency called the Food and Drug Administration, and FDA compliance for med device manufacturers.

Today, we’re going to look at:

  • Why getting compliance right the first time is critical for med device companies
  • What FDA compliance actually looks like
  • Why product recalls regularly cost billions
  • How companies can meet the rising compliance demands from both the FDA and European regulators
  • FDA approval.

Time is of the essence

Anyone who’s gone through the FDA compliance for med device manufacturers approval knows it’s a long and complex process.

Take, for example, med device pre-market approval.

The FDA’s goal is to process pre-market applications within 6 months.

In reality, though, this process takes much, much longer with an average turnaround of 320 days.

Average turnaround for FDA pre-market approval is 320 days.

With such long wait times for pre-market approval, it is imperative that medical device manufacturers get compliance right the first time around.

What’s more, FDA compliance for med device manufacturers is a bit of a highwire act. If manufacturers fail to meet to FDA regulations in even the slightest manner, they’re left waiting at least another year before their product can be marketed.

So what does FDA compliance for med device manufacturers mean?

  • Longer time to market
  • Loss of competitive edge on medical breakthroughs
  • Diminished or nullified first-mover advantage.

So what exactly does the FDA need for medical device manufacturers to be deemed compliant?

FDA compliance for med device manufacturers

When it comes to compliance, the FDA focuses on three things:

  1. Preventing recalls
  2. Data transparency
  3. Quality products.

The Code of Federal Regulations ensures that medical device manufacturers uphold these principles under section 820: Quality System Regulation.

Section 820 ensures that controls are in place throughout product development and is designed specifically to prevent dangerous and expensive product recalls.

Section 820 is generally interested in tracking changes and ensuring that there was some documented approvals process for that change.

Here’s a quick summary:

  • Design history files. All product design changes must be documented and cataloged.
  • Step by step approval. All revisions throughout the product development process must be approved by the appropriate personnel.
  • Product validation. Medical devices must actually be able to do what manufacturers say they can.
  • Document suppliers. Manufacturers are responsible for vetting all external suppliers and ensuring the quality of their work.
  • Maintain quality. Manufacturers must have validated processes established to ensure product quality.

Why quality regulation is a must

Section 820 is an FDA compliance for med device manufacturers. It exists to ensure that medical device manufacturers are making products that are of high quality.

By requiring medical device manufacturers to document product changes, processes, and suppliers, manufacturers can easily identify problems with their products.

Although problems are ideally spotted before products are approved and hit the market, this isn’t always the case.

In fact, the FDA estimates that 400 recalls could be prevented annually if manufacturers had better design control practices, highlighting the importance of section 820 in avoiding product recall.

The FDA estimates that 400 recalls annually could be prevented if manufacturers had better design control practices.

The price of product recalls

Medical device manufacturers need to ensure product quality so that they avoid the consequences of recalls.

Why are recalls so detrimental to medical device manufacturers?

A 2017 McKinsey Report states that the cost of one major recall can be as much as $600 million.

A single major recall can cost medical device companies as much as $600 million.

That’s a lot of revenue down the drain for manufacturers, and this $600 million doesn’t even include the expensive lawsuits that follow.

The same report also estimates that non-routine quality events such as product recalls and their associated warranties and lawsuits cost the medical device industry $2.5 billion – $5 billion annually.

Recalls and their associated warranties and lawsuits cost the medical device industry $2.5 billion – $5 billion annually.

Product recalls ruin credibility

McKinsey notes that individual companies can face up to a 10% drop in shares after a single major quality event such as a medical device recall.

Companies can face up to a 10% drop in shares after a single major quality event such as a medical device recall.

Further, recalls negatively impact investors’ confidence in the medical device industry at large.

McKinsey goes on to say that over the last decade, there was an average of one major quality event per year that resulted in a 13% stock price drop across the whole industry.

In the past 10 years, there was an average of one major quality event per year that resulted in a 13% stock price drop across the industry.

An example of the impact of medical device recalls is seen in the 2010 Boston Scientific implantable defibrillator recall. The night after the recall was announced, company shares dropped 13%.

To make things worse, they lost $5 million every day the product was off the market.

Moral of the story?

Medical device manufacturers need to ensure products meet to the quality standards outlined by the FDA to avoid product recalls that might be cripplingly expensive.

The danger of recalls

Product recalls aren’t just expensive. They’re also deadly.

Section 820 applies primarily to class III devices. Class III devices are deemed high risk because they are often life-sustaining for the individuals who use them.

An example of a class III device is a pacemaker — if it fails, the user will die.

In 2009 the total number of injuries that were due to defective medical devices was a staggering 28,049 (hence section 820).

During 2009 the FDA reported 28,049 people were at least hospitalized because of injuries they sustained from defective medical devices.

Quality is a must for medical device manufacturers as lives are on the line when devices aren’t up to par.

The Challenge

Unfortunately, meeting the section 820 requirements is easier said than done.

Product complexity and long supply chains medical device manufacturers face today make complying with section 820 challenging:

  • Thousands of parts go into a medical device and are hard to keep track of. With so many elements of the final product changing throughout the design process, it’s hard to make sure every single change is recorded in a product’s design history file.
  • CIMData estimates that 70% of industrial and consumer products, like medical devices, are made from procured in content. Keeping track of the hundreds of suppliers that contribute to a single product is no easy feat.
  • Gaining approval for all of the changes that occur throughout product development is difficult when signing officers are all over the world.

For example, the CIO of Medrad Inc., now Bayer Healthcare, explained that getting the approval on design changes as simple as swapping a plastic part to a titanium one could take months.

Just getting the signatures of six people for this simple change could take months.

The Solution

Continuing business as usual just isn’t an option for med device companies.

Regulations are getting tougher and products are getting more complex.

To surpass FDA compliance for med device manufacturers, companies need to streamline the processes required for compliance to regulations like section 820, and they need solutions that will track their products automatically through the entire product lifecycle.

Our advice: digital solutions.

Find a way to automate your process so you can meet regulations by default. That reduces the risk of a recall and the risk of a manual mistake costing you your premarket approval — ultimately giving your team the bandwidth they need to focus on building life-saving solutions.

Got a regulatory conundrum? We can help. Find out how we work in tightly regulated spaces and still help companies beat their production deadlines.


Image credit: Chuttersnap via Unsplash

2018-12-12T13:58:39+00:00