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Product recalls in the US reached a record high in 2014. Government agencies responsible for issuing recall notices and recommendation are becoming increasingly stringent. At the same time, manufacturers are often voluntarily recalling products even if there is minimal suspicion of a defect. This is done in order to avoid potentially much larger costs down the road from litigation and sales declines due to loss of reputation in the event of a major problem with the product. There have been numerous examples in recent history of manufacturers losing billions of dollars and even being forced into bankruptcy after delayed product recalls, especially when there were fatalities involved.
The Motor Vehicle Industry’s Miserable 2014
The year 2014 was a terrible year for the US motor vehicle industry insofar as product recalls go. A record 64 million vehicles were recalled, more than double the prior record of 30.8 million units set in 2004. The magnitude of this 2014 recall figure is even more evident when one considers that a total of 16.5 million vehicles were sold in the US in 2014. i.e., almost four times the number of vehicles sold in the US in 2014 were recalled.
GM was especially adversely impacted, having to recall a record 27 million vehicles, with many of those resulting from widely publicized defective ignition switches that have been blamed for over 50 deaths to date. The company received much negative publicity due to delayed recalls of older vehicles.
The Pharmaceutical Industry
The pharmaceutical sector has suffered from two record years when it comes to recalls, with 2014 (data through July below) expected to have been even worse than the record 2013. However, it should be noted that the vast majority of recalls in the pharmaceutical industry comprise of Category II recalls, which involve defective products that are typically not likely to be fatal.
Stricter Government Regulations, Greater Transparency via openFDA
As a result of the problems with delayed recalls in the motor vehicle industry in 2014, the US government is likely to significantly increase the National Highway Transportation Safety Administration (NHTSA)’s defect investigations budget in order to spot recalls earlier. Moreover, the NHTSA wants Congress to raise the maximum delayed recall fine for automakers from its current $35 million to $300 million, and it also wants greater authority to get unsafe vehicles off roads faster.
In 2013, the US Food & Drug Administration (FDA) under the initiative of Taha Kass-Hout (the first ever chief health informatics officer) launched a groundbreaking openFDA project that will enable easy access to public data on drugs, devices and food, including recall data. The hope is that this initiative will result in much greater transparency and accountability. The website for openFDA is still in beta version and can be found at: https://open.fda.gov/
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