q1 2020 recall index · q1 2020 recall index: product recall data trends and predictions for us...

Q1 2020 RECALL INDEXALL INDUSTRIES

UNITED STATES EDITION

DATA, TRENDS & PREDICTIONS FOR US IN DUSTRIES

The Quarterly Recall Index published by Stericycle Expert Solutions is an

essential reference for U.S. manufacturers and retailers seeking impartial

and reliable perspective on past, present, and future recall data and trends.

The Index collects and analyzes data from the Consumer Product Safety

Commission (CPSC), the Food and Drug Administration (FDA), the

National Highway Traffic Safety Administration (NHTSA) and the U.S.

Department of Agriculture (USDA), providing businesses with insights and

guidance they cannot find elsewhere.

In order to provide you with more of the expert analysis you need about the trends and

changes in the safety regulation of food, drugs, consumer products, medical devices, and

automobiles, we also include insights from some of our strategic partners at leading law

firms, insurance companies, and communications firms.

This content is designed to serve as a guide that will help business professionals navigate

the reputational threats that bedevil their constantly evolving markets. As lawmakers

question whether regulators are effectively protecting consumers, and new product

categories disrupt the market, there has never been a more important time for companies

at every level of the supply chain to be primed and ready for recalls and related threats to

their livelihood.

We trust you will find the analysis and predictions insightful. Whether you read it cover-to-

cover, or focus on sections of special importance to your company or industry, you’re sure to

learn a great deal about what is happening today and what is likely to happen next that will

have an impact on your organization.

To learn more about the rise and fall of recall trends and to acquire knowledge about how to

plan for one, visit www.stericycleexpertsolutions.com, call us at 1-888-732-3901 or email

[email protected].

Q1 2020 RECALL INDEX: PRODUCT RECALL DATA, TRENDS AND PREDICTIONS FOR US INDUSTRIES 3

http://www.stericycleexpertsolutions.com

mailto:AskTheExperts%40Stericycle.com?subject=


6SUMMARY

10CONSUMER PRODUCTS

18 MEDICAL DEVICE

26 PHARMACEUTICAL

34FOOD AND BEVERAGE

42AUTOMOTIVE

48CONCLUSION

49ABOUT

CONTENTS

We cannot underestimate the potential impact of one unfortunate recall during a time when businesses are trying to stay afloat and consumers are already stressed, distracted and, in some cases, living in fear.”

Over the past three months, our companies and

the organizations we work with have been forced

to adapt to a new normal – remote workforces,

supply chain disruptions, shuttered facilities and

retail locations, changes in consumer demand

and buying habits, and a myriad of business

challenges. It’s an environment we could have

never planned for.

We don’t know the full impact this will have on

our companies, customers, business partners and

consumers. Certainly, it will impact near-term

revenue, long-term investments, and consumer

spending. But it will also impact reputations in ways

that cannot yet be measured.

Every act of goodwill to support COVID-19 response

and those impacted by it have the potential to build

positive relationships with consumers. But we cannot

underestimate the potential impact of one unfortunate

recall during a time when businesses are trying to stay

afloat and consumers are already stressed, distracted

and, in some cases, living in fear.

The coronavirus pandemic did not have a significant

impact on recall volume in the first quarter – the

focus of this report. But COVID-19’s impact on the

United States was just beginning in March, and will

continue for the foreseeable future. With that in mind,

we started looking at April recall activity to share a

preview for the second quarter.

We began to see a drop in pharmaceutical and medical

device recalls in April, not unlike what we saw during

the government shutdown early last year. But that

trend is not accurate across the board, CPSC and FDA

food recalls were significantly higher in April than they

were during last year’s shutdown.

So don’t get too comfortable. Recalls are still

occurring. Like our own workforces, regulators

are working remotely, which means their routine

inspections and investigations are less frequent. While

the frequency of recalls may slip slightly with the

restrictions on businesses and regulators, the fact is

that the risk is constant.

Keep in mind that recall management during the

COVID era will be trickier than ever before thanks

to all the business challenges we are experiencing.

And to the extent that recall activity stays low in the

immediate near term, there’s a good chance we’ll see a

rush of recalls, once stay-in-place and social distancing

orders are lifted.

In the pages that follow we share recall data, trends,

and insight. But the big takeaway isn’t in the numbers.

It’s the fact that recalls will be more challenging now

and into the future. More on that as we move along.

SUMMARY


CONSUMER PRODUCTS

MEDICAL DEVICE

We conducted this research to uncover the major challenges facing each industry

and the findings make clear that, across all sectors, the logistical and recall threats

facing companies are evolving rapidly. As manufacturing processes and global

supply chains become ever more complex, businesses need to constantly

re-evaluate and improve their recall strategies. Recalls, when handled badly,

can create a host of headaches for companies, including financial and reputational

damage. And with federal and state-level legislators set to bring in new regulations,

especially in major markets like California and New York, it has never been more

important for executives to make sure they’re prepared should the worst happen.

PHARMACEUTICAL

FOOD AND BEVERAGE

AUTOMOTIVE


Many consumer-product companies are struggling to

maintain normal operations during the coronavirus

pandemic. While some retailers and manufacturers

have received the “essential” designation, others are

shuttered and forced to rely on e-commerce to bring

in the revenue they can.

Meanwhile, consumer habits have changed dramatically. Adults

and children alike are spending almost their entire day at home.

Parents are splitting their time between the roles of employee,

parent, caregiver, teacher and partner. CPSC has recognized this,

and has taken its focus on protecting children in a new direction

– enforcing mandatory standards like child-resistant packaging.

In the first quarter alone, the agency announced eight recalls for

this reason – the most we’ve seen in one quarter since we’ve been

analyzing recall data. When you think about it, it’s just the kind of

risk that increases when children spend more time in the home.

CDC has the confirmation if you need it: calls to the poison control

hotline have spiked in the first quarter.

Despite the uncertainty we’re all feeling as a result of COVID-19,

the CPSC charged full-steam ahead in the first quarter. The CPSC

issued three “unilateral” press releases warning consumers about

product safety hazards in the first quarter – an action rarely if ever

taken by the agency. It published its Midyear Adjustments without

a public briefing and moved forward with new rulemaking on new

crib bumpers. And in response to COVID-19, the agency posted a

Recall Remedy Notice warning consumers that recall fixes may not

be available and reminding them not to use recalled products.

CONSUMER PRODUCTS

Despite the uncertainty we’re all feeling as a result of COVID-19, the CPSC charged full-steam ahead in the first quarter.”


While you’re rightfully focused on adapting to keep your business in its best financial position, make sure you’re also prepared for the challenges of a recall in this environment.

Things like customer communications challenges (particularly

if your customer care center has downsized, transitioned to

a remote basis, or even shuttered), disruptions throughout

the supply chain (impairing your ability to collect and

store returned product), more scrutiny from consumers

and retailers, and the possibility that you lack resources to

provide a recall fix (leading to more recall announcements in

the future).

This much is certain: the CPSC isn’t slowing down.


We are living through an extraordinary time. Every industry, company, and

employee is wondering what the COVID-19 pandemic means for them now.

And what it means for the future.

WITH CPSC, WHERE THERE IS UNCERTAINTY, EXPECT ACTION.

If there’s one thing I can tell you from my time at

CPSC, it’s this: when there is uncertainty, particularly

about leadership, there is a heightened sense of

urgency. So while the nomination for Nancy Beck to

take the helm of CPSC is unlikely to go anywhere as

long as Congress is focused on COVID-19, agency staff

remain focused holding companies accountable while

they still have Robert Adler as the Acting Chairman.

So what does that mean?

Recalls due to regulatory violations will continue

to increase. With kids home all day, and families

juggling work and parenting, CPSC is more concerned

than ever before about hazards in the home. Not just

hazards associated with traditional children’s products

– a topic covered heavily by media over the last

year. But kids are also exposed to hazards posed by

everyday consumer products like medications, cleaning

supplies, art materials, and other household chemicals.

CPSC’s jurisdiction over these hazards is very broad

and includes complex mandatory regulations

covering testing, labeling, and packaging that many

consumers and companies are not fully aware of.

And CPSC has a laser focus on ensuring companies

are in full compliance.

Companies may face recalls or enforcement

action for violating regulations – for things

like packaging – they didn’t realize applied to

them. Many companies are trying to meet consumer

demand for things like hand sanitizer and cleaning

supplies. But what they may not realize is that these

are heavily regulated product areas by not just FDA,

but also CPSC which has jurisdiction over product

packaging and labeling. Many new manufacturers in

this space are not fully conversant in these regulatory

requirements. That’s a problem. Take the time now to

fully understand the regulatory requirements that apply

to you. (That goes double for you, new hand-sanitizer

and cleaning product sellers and producers.)

BOAZ GREEN, COUNSEL, KELLER AND HECKMAN

Your supply chain may be putting you at risk.

Supply chain challenges aren’t exclusive to drug and

food companies. Coronavirus has placed huge strains

on supply chains for consumer product companies too.

And where there is stress or disruption, there is a lot

more economic pressure. Suppliers might have more

incentive, if their customers are not watching, to swap

out components or materials. That could mean using

materials that don’t meet your specifications, or even

fail to meet regulatory requirements.

While this switch might not always pose a threat to

consumer safety, the stakes are higher when making

products for children that have to meet standards

for things like lead and phthalates. Keep in mind, the

challenge here isn’t just the pinch your suppliers are

feeling. If you or your auditors can’t travel, it’s harder

to keep close eye on your suppliers, which translate

to more exposure to product safety, quality, and

regulatory compliance issues. It may also be harder to

test your products for compliance and to make sure

testing is being done appropriately.

Finally, prepare for new recall challenges. CPSC is

still working, still watching, and still trying to pressure

companies to recall products. The fact that it will be a

lot harder to implement a recall, or that you don’t have

the means to produce or process a remedy, doesn’t

seem to be much of a concern for the agency. Don’t

expect leniency. In fact, it’s more likely CPSC will try to

pressure companies to make multiple announcements:

First, calling on consumers to stop using the product;

the second to remind consumers of the recall when

you’re finally able to provide a remedy. Maybe a third,

if you don’t get sufficient response.

That translates into more time working with the

agency, more time to examine the remedy, more tense

communication with consumers, and – as retailers

examine their business models post-COVID-19 – an

uphill battle regaining consumer and customer trust.

Don’t get caught flatfooted. Consult regulatory

counsel. Conduct extra quality checks. Make sure your

supply chain is buttoned up. Then update and test

your recall plan, because if you need to recall, it’s likely

you haven’t considered the logistics and communications

challenges that this pandemic presents.


FIRST QUARTER BY THE NUMBERS

While the average size of a recall in 2019 was just

about 98,000 units, first quarter recalls averaged

149,000 units, which can be attributed to Contigo’s

repeat recall of children’s water bottles which

accounted for nearly two-thirds of recalled units.

While there were no deaths recorded, the number of

incidents recorded doubled compared with previous

quarter and were the highest since the fourth quarter

of 2018. Of those incidents, 83.4% can be attributed to

one of five recalls and 39.0% of incidents were linked

to off-highway utility vehicles.

Top hazard among all events was injury risk, accounting

for 20.9% of recalls. The increase in recalls due to

childproof packaging is also notable. Accounting for

8 recalls in the first quarter, the quarterly count is the

highest seen since we started tracking this data in

2013. If recall activity related to packaging continues

at this pace through the remainder of the year, we

will see a 128.5% increase over last year (the previous

record-breaking recall levels for packaging).

In terms of units recalled, choking and small parts

risks were the top hazard, affecting nearly two-thirds

of recalled units. Nearly all these units were due

to Contigo’s “rolling recall.” This recall also placed

kitchen products as the top product category based

on recalled units making up nearly two-thirds of

recalled units. If you remove that single event from

the calculations, the top hazard was entrapment or

strangulation risks and the top product category

based on recalled units was yard and garden.

FIRST QUARTER RECALLS

REPRESENTED A 57% INCREASE

IN RECALLED UNITS COMPARED

TO LAST YEAR’S AVERAGE.

57%

Q1 2020

N U M B E R O F R E C A L L S B Y Q UA R T E R

90

75

60

45

30

15

0

Product safety is a high priority in 2020. On average, five consumer-product recalls

were announced each week in the first quarter, maintaining the average pace of 2019

recalls. But first quarter recalls represented a 57% increase in recalled units compared

to last year’s average. In fact, recalled units in the first quarter increased 150% to 9.2

million compared with the fourth quarter 2019.

Q4 2019Q3 2019Q2 2019

More sports and recreation products were recalled

than any other category again in the first quarter (x 13

products), making it the most frequently recalled product

category for the fifth straight quarter. However, by

“volume of units involved” sports and recreation (at

187,180 units) was dwarfed by the likes of kitchen, yard

and garden, and home furnishings.

Chi

ldpr

oof

Pack

agin

g Vi

olat

ion

Fire

Inju

ry

Entra

pmen

t/St

rang

ulat

ion

N U M B E R O F R E C A L L S B Y R I S K T Y P E

12

14

10

8

6

4

2

0

N U M B E R O F U N I T S R E C A L L E D B Y C AT E G O R Y

6MM

5MM

4MM

3MM

2MM

1MM

0

Pers

onal

C

are

Chi

ldre

n’s

Prod

ucts

Yard

&

Gar

den

Kitc

hen

Hom

e Fu

rnis

hing

s &

Déco

r


Recalls continued at a steady pace through the first

quarter, but the medical device recall story of 2020

is likely just beginning. There’s good chance we’ll see

a downturn in recall activity in the second quarter,

at least until the country and economy open back

up and the FDA’s emergency authorizations and

regulatory discretion come to an end. Then expect a

rush of activity as the FDA moves full speed ahead to

lock down an industry that multiplied overnight.

As product shortages were realized, major consumer product

companies and hobbyists alike jumped in to make up for the lack

of supply in devices, particularly personal protection equipment.

Their actions are permitted under the FDA’s emergency

authorizations, but that doesn’t mean all products are created

equal in the eyes of regulators – both in terms of quality and

the way they were manufactured (according to specific CGMP

for medical devices).

MEDICAL DEVICE


Here’s where things get even more interesting for the industry.

Pair emergency authorizations and regulatory discretion with the

findings of a research letter recently published in JAMA Internal

Medicine. The review found that the faster a new medical device

is approved, the sooner it’s likely to be recalled. While there are

limitations to the data, the two conclusions they draw are startling:

1. Medical devices approved by priority review were

twice as likely to be recalled.

2. Devices that received a priority review were recalled

6.5 months sooner once they entered the market.

Now think about those findings in terms of the current

environment. Of course, brand new devices aren’t going to get a

green light just because we’re in a pandemic. But companies are

moving more quickly than they normally would, and companies

that don’t traditionally manufacture medical devices are getting

into the game. While more good than harm is likely to be done by

quickly advancing device production and medical technologies,

it’s an unfortunate fact that speed often comes at the expense of

quality or safety.

Put that all together, and we’re predicting a surge in product

recalls and withdrawals once the economy and country get back

to “normal.” And when it comes to medical device safety, it’s

serious business.

We’re predicting a surge in product recalls and withdrawals once the economy and country get back to “normal.”


COVID-19 presents a unique set of circumstances for long-standing medical

device companies. They are experiencing a surge in demand for a range of

devices – from complex medical equipment like extracorporeal membrane

oxygenators to simple products that most people wouldn’t think of as

medical devices like face masks and surgical gowns.

RELAXED REGULATIONS NOW MAY CAUSE CHALLENGES IN ENFORCEMENT AND RECALLS LATER

But remote workforces, employee shortages,

manufacturing plant limitations, uncertain global

supply chains and a strict regulatory environment make

it difficult to deliver at the speed required.

The good news is that FDA is trying to be helpful. In

fact, the agency has done a tremendous amount of

work to issue guidance documents, review emergency

use authorizations and implement enforcement-

discretion policies that will last for the duration of

this health crisis. For example, FDA has relaxed the

requirement for companies to file and receive approval

of a new 510(k) before changing certain materials,

software or hardware for ventilators and anesthesia gas

machines, allowing manufacturers to keep production

of these critical medical devices moving.

But this supportive, somewhat relaxed, regulatory

environment will eventually come to an end. When it

does, both traditional medical device manufacturers

and new market entrants may face a rude awakening.

While we’re likely to see a downturn in recalls and

enforcement at least through the summer as FDA and

manufacturers focus on responding to and getting

through the crisis, when FDA ramps up inspections and

oversight activities, we may see a surge in regulatory

enforcement. That’s because issues that have gone

undetected without ordinary mechanisms (such as

routine FDA inspections) will suddenly be under scrutiny.

Recalls and enforcement actions are bound to follow.

We have no idea how or when the period of

emergency-use authorizations and enforcement-

discretion will end. But companies need to plan as

if it will happen with the flip of a switch and without

warning. That moment is not the time to be catching

up on delayed paperwork, recordkeeping, or worse

yet, getting smart on medical device regulations.

Now this is not likely to be an issue for traditional

medical device manufacturers. In our experience, these

companies may be taking advantage of the guidance

and enforcement discretion being offered to make

timely changes and meet demand, particularly in light

MAYA FLORENCE, PARTNER IN THE HEALTH CARE AND LIFE SCIENCES PRACTICE, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

of any material shortages or the need to adapt devices

for new uses. But traditional device manufacturers are

keenly aware of their regulatory obligations.

New market entrants face the biggest challenges. In

response to the public health crisis, many consumer-

product companies that usually make non-essential

goods are working to help the medical device

industry meet demand for things like face shields,

hospital gowns, and masks. At the same time, under

FDA’s guidances and expanded use authorizations,

technology companies have been finding ways

to adapt products that have not historically been

used for medical purposes, in order to meet the

increased demand for telehealth, digital health and

remote monitoring. While traditional medical device

companies have systems in place to detect quality-

control issues and track adverse event reports,

coronavirus-inspired market entrants may not know

what they need to report, when to report it, how to

handle an issue if it’s identified, or even what FDA’s

reporting and recall processes looks like.

For this reason companies that choose to stay in the

medical device space after the crisis is over will be

facing a whole new world of regulatory scrutiny. I

encourage you to ask yourself if you really know what

medical device compliance involves. Would you be

ready to comply if you needed to next week? Begin

now to get up to speed on FDA’s expectations if you

intend to continue operating as a medical device

manufacturer, even for lower-risk or digital devices.

It’s hard to imagine that what we’re living through right

now will result in long-term changes to the way FDA

regulates medical devices, so it’s in all manufacturers’

interest to ensure they are prepared to return to

normal. Here’s my advice: If you’ve been in the medical

device business for a while, don’t let yourself become

complacent; if you’re dipping your toe in the waters of

medical device manufacturing for the first time, make

sure you educate yourself on what compliance really

looks like before making any decisions to stay in the

industry once this pandemic ends.


Medical device recalls remained steady in the first quarter at 260, representing a 6.1%

decrease in events compared with last quarter.


The average first quarter recall impacted 1,365,848

units. This, however, includes one extremely large

Medical Device recall impacting more than 314 million

units. If you remove that recall from calculations,

just 40.6 million units were recalled. This represents

another 27.8 percent drop in total recalled units

compared with last quarter, and brings the average

recall size to 156,000 units.

Take into account, however, that these numbers don’t

include the CDC’s recall of coronavirus tests – an event

that has not been recorded or publicized in the typical

way. It’s an event that warrants close scrutiny once

we’re past the worst of this pandemic in order to best

prepare ourselves for the next viral outbreak.

Software issues were the reason for 48 recalls in

the first quarter, coming in as the top cause for

recalls for the 16th consecutive quarter. Quality and

out of specification issues followed with 42 and 34

recalls respectively. When it comes to units, out of

specification issues lead the way as the top cause,

affecting 88.6% of units. But when you remove the

anomalous recall, the top cause based on units was

quality issues, followed closely by safety concerns.

More than half of all FDA device recalls had a

nationwide reach, with 48.5% of recalls also impacting

international customers.

The average first quarter recall impacted 1,365,848 units.”

Q1 2020

N U M B E R O F R E C A L L E D U N I T S B Y Q UA R T E R

300MM

400MM

250MM

350MM

200MM

150MM

100MM

50MM

0Q4 2019Q3 2019Q2 2019

N U M B E R O F R E C A L L S B Y R E A S O N

50

40

30

20

10

0

Devi

ce

Failu

re

Mis

labe

ling

Qua

lity

Softw

are

Out

side

of

Spec

ifica

tions


Like medical device recalls, pharmaceutical recalls remained flat, but

significant challenges lie ahead. We again predict a downturn in recall

activity for at least the first part of the second quarter if not longer

– at least until the FDA gets inspectors back on the road. But then

expect a rush of activity. Some of the agency’s first targets are likely

to be the overseas manufacturers who have a history of violations

but have stepped in to try and prevent product shortages, or at least

lessen their impacts.

Early in the pandemic response, the FDA publicly acknowledged

that drug shortages would be a likely byproduct. Prescription drugs,

for example, have become scarce due to supply gaps caused by the

coronavirus pandemic. Bloomberg Law recently reported that the FDA

is allowing overseas pharmaceutical plants “with checkered safety and

quality records” to make medicine for American consumers. Preventing

drug shortages is great for patients – as long as it doesn’t come at the

cost of unsafe or ineffective products.

But there has never been a more critical time to proactively manage your

supply chain and prepare for a potential recall or product safety crisis.

Particularly when neither your quality and safety teams nor regulators

are permitted to travel to conduct audits and inspections to ensure the

safety of the product being produced.

PHARMACEUTICALWe again predict a downturn in recall activity for at least the first part of the second quarter if not longer – at least until the FDA gets inspectors back on the road. But then expect a rush of activity.”


The fact is one significant recall could have a profound impact on consumer health, which places added pressure on regulators and companies to effectively manage the event.”

The fact is one significant recall could have a profound impact on consumer

health, which places added pressure on regulators and companies to

effectively manage the event. The challenge on the company is even greater

if the quality team is forced to work remotely.

Now is the time to overcommunicate. Companies need to reassure

customers and consumers that the appropriate precautions are being taken.

That reassurance in and of itself has power. Open communication about the

risk also serves as a reminder to everyone in the supply chain that safety and

diligence are important. Protections are in place.

As we start to return to our new “normal” business environment, keep in

mind where the agency’s priorities were before the outbreak started. Overseas

manufacturers had a target on their back before this outbreak started. Once

things settle down, companies can count on the agency returning its focus

on API manufacturers and overseas manufacturing facilities.


If there’s one thing we call can relate to during this COVID-19 era, it’s that

our lives – and our businesses – have been disrupted. Supply chains have

been reorganized. Business priorities have shifted. Even our responsibilities

as employers have changed.

FOR PHARMACEUTICAL COMPANIES, PREPARE FOR THE COMING COVID-19 CRACKDOWN

The same applies to the management, compliance and

premarket review personnel at FDA.

Regulatory staff are working remotely, on-site

inspections have given way to paper-based audits,

extensive enforcement discretion is in place, as the

agency staff members have shifted their focus to

provide emergency authorizations in support of the

COVID-19 response. But just because the regulatory

environment may feel more relaxed right now, you

would be wrong to assume the FDA is turning a

blind eye.

For starters, when it comes to COVID-19 response,

we are seeing a lot of pharmaceutical and medical

device companies working to determine how

to create effective treatments, such as drugs,

vaccines, diagnostics, and personal protective

equipment as quickly as possible. In some cases that

means desperately scouring current research and

development pipelines for pharmaceuticals that might

be helpful in treating COVID-19 symptoms or move

us closer to a vaccine. But grasping at straws to find

effective medical products has never been a favored

FDA practice.

FDA wants data – research, clinical trials, proof that

a product’s intended use is both safe and effective,

ideally without any significant adverse events

associated that outweigh the benefits. That said, the

agency understands that the standard pre-market

approval process is time-consuming and when there is an

emergency alternative pathways must be considered.

That’s why emergency authorizations and regulatory

discretion are so important. The good news is that, in

our experience, many pharmaceutical companies with

long-standing compliant relationships are working

very closely with FDA to quickly find solutions while

navigating a more flexible pathway forward.

Even when all actions are in good faith, there will be

a time when enforcement discretion and emergency

authorization policies are rescinded, thus resulting in a

steadfast return to the previous regulatory framework.

Guidance documents issued during the pandemic will

no longer be in effect, which may lead to a significant

volume of products that no longer have appropriate

approvals to be marketed and used in the same way

they are now.

Adulterated products will be a priority for the agency

when the country reopens. Products found to make

inappropriate marketing claims – particularly those

that suggest they will protect or treat symptoms

of COVID-19 – will be a close second, though FDA

has already taken swift action against companies

inappropriately marketing a myriad of products.

SONALI GUNAWARDHANA, OF COUNSEL, SHOOK HARDY & BACON

By early May, the FDA announced that more than 40

warning letters were issued to organizations making

fraudulent claims about a product’s ability to prevent

or treat COVID-19. That’s just the first step in a

regulatory crackdown. The same public update issued

a direct warning that the FDA will find and pursue

companies selling fraudulent products.

Whether its fraudulent claims or adulterated products,

companies need to mitigate more than just regulatory

risks. There’s the remaining issue of product liability.

Even though the FDA has said they would provide

enforcement discretion, that doesn’t mean that

companies are immune from litigation. Even where

the agency can provide some level of coverage

based upon products that received emergency use

authorization which may be shielded through the

PREP Act, class action and product liability lawsuits

are still a threat.

As the country reopens, we will begin to understand

what new operational processes will remain and

which previous methods will resume. For example,

the agency will likely examine the effectiveness of

paper-based audits. To the extent they worked, they

may continue for a certain segment of inspections.

But there are a few categories where on-site audits

will remain a mainstay: situations where FDA has

concerns about the manufacturer due to a previous

violative inspection; a check-in on previous provided

written corrective actions; or facilities responsible for

producing newly approved products. These companies

will need to be compliant with the established

regulatory framework.

Then, once the catch-up period is over, expect FDA to

return to its 2020 work plan and resume activities on

issues such as drug pricing, strengthening oversight of

compounded drugs, and supply chain management,

which may not occur until 2021.

None of us have experienced a regulatory environment

like the one we are operating in right now. My advice

to pharmaceutical companies is to stay vigilant

and maintain compliance with the long-standing

regulations and guidance. If you are operating

under emergency authorizations or relying on FDA’s

discretion to avoid enforcement action, be ready

to change course immediately if current COVID-19-

related guidance is rescinded quickly.



We saw one recall every day in the first quarter as

pharmaceutical recalls remained flat at 93 events.

While there was no change in the number of recalls

compared with last quarter, first quarter events

impacted more than 51 million units. This represents

a 77.3% increase in units compared with the fourth

quarter and accounts for 58.3% of total units recalled

for all of 2019.

Inconsistency in Current Good Manufacturing Practices

(CGMP deviations) continued to be the top reason

for pharmaceutical recalls in terms of events and units

impacted. CGMP deviations accounted for 26.9% of all

recalls and 55% of all recalled units in the first quarter.

This includes at least 14 recalls linked to NDMA

impurities. Those recalls impacted a total 27.8

million units – more than half of all units recalled in

the first quarter.

Sixty-one companies announced recalls in the first

quarter, and of those companies, 18 announced more

than one recall.

Q1 2020

N U M B E R O F R E C A L L E D U N I T S B Y Q UA R T E R

60MM

50MM

40MM

30MM

20MM

10MM

0Q4 2019Q3 2019Q2 2019


30

25

20

15

10

5

0

Fore

ign

Mat

eria

l

Mis

labe

ling

Con

tam

inat

ion

CG

MP

Faile

dSp

ecifi

catio

ns


Most stories about the U.S. food supply

are related to the COVID-19 pandemic

and sporadic product shortages. Now,

as more meat processing plants struggle

to remain in operation, questions turn

increasingly toward the safety of our food

supply, whether regulators are doing

enough, and whether the companies and

industry can be trusted.

These are the type of questions that align with the

agendas of consumer advocacy groups and fuel

their base. These organizations have long called on

the USDA and FDA for stronger enforcement and

oversight of the food industry, and they will use

this opportunity to advance their campaigns. But in

practice it means that when a component is identified

as a safety risk, the impact is far-reaching.

FOOD AND BEVERAGE


While there is no evidence so far that food or food packaging is involved

in the transmission of COVID-19, there is consumer fear. Consumers are

arguably hearing more about the impact of COVID-19 on the food industry

than nearly any other – medical professionals being the exception. Media

coverage tells stories that create and foster fear. Stories about product

shortages, the shrinking size of workforces, the lack of standards and

equipment to protect people in the fields and processing plants, fields being

plowed under, and meat processing facilities speeding up production lines.

That fear has the potential to drive advocacy campaigns and put added

pressure on regulators and companies. Keep in mind that fear can also cloud

consumer minds if there’s a recall. Even if that recall arguably has nothing to

do with COVID-19.

Companies in the food industry have their work cut out for them during

this outbreak and for months after. But the key is to focus intensely on the

basics. It’s too easy to assume food safety protocols and quality controls are

followed as strictly and uniformly as they always are. Use this time wisely to

recheck your supply chain, review your food-safety processes and update

your recall plan.

A poorly managed recall could be devastating in this environment – not

just for your company, but the entire sector.

Media coverage tells stories that create and foster fear.”


While many factors impacting a company’s ability

to manage a recall today aren’t new, the business

environment is. As recent events have shown no one

can predict what will happen in a week, let alone three

months or a year. And with that, my biggest fear is that

many companies may be under-prepared to manage a

recall in this environment.

Ideally, you’ve updated your crisis management and recall

plans regularly. You’ve also tested those plans through

simulation exercises. However, every crisis is unique and

will include unexpected issues or problems. Now’s the time

to dust off your plan off and test it, with a focus on the

following factors that present new and unique risks given

the strange times we’re living in:

Supply Chain Risks. Global supply chain management is

challenging even in “normal” times. Managing a network

of specialized ingredient suppliers, processors, and

regulators around the world presents significant risk and

challenges. Regulatory inspections are on hold and travel

restrictions keep you from doing regular audits of your

suppliers, placing the burden of responsibility with supply

chain partners. Not to mention that if one link in the chain

goes down, you need to be ready to quickly, efficiently,

and safely institute new quality-control measures or turn to

a new supplier. Could you do that? More importantly, can

you trust the decision if it needs to be made remotely?

A CRISIS CAN OCCUR AT ANY TIME, WILL YOUR PLAN RESPOND?

BERNHARD STEVES, MANAGING DIRECTOR OF COMMERCIAL RISK SOLUTIONS, AON

Timing. One factor in how long a recall impacts

your reputation and bottom line is when it happens.

Recalling food during a pandemic presents a set of

challenges you likely haven’t planned for – at least not

in any helpful way before this year. While the pandemic

may have nothing to do with the “why” of the recall,

it will have much to do with the “how” – how to

communicate, how to get the product back, how to

ensure safe product in the future, and how to rebuild

trust with retailers, business partners, and consumers.

Reach. A single recall can result in dozens more.

Take as examples last year’s egg or flour recalls. Your

product might be the source, or it could be one of

many impacted by your supplier’s recall. Either way,

do you have the means by which to effectively identify

and remove impacted product?

Logistics and Execution. How you execute the

recall will be critical to your success. Make sure you

have the internal and external resources you need to

manage the recall. That includes sending notifications,

pulling product from shelves, and working with

distribution partners to ensure only safe product

is in the market. Now keep in mind that traditional

logistics and communications channels may not be

effective, appropriate or even available in this current

environment. Do you need to make alternative

arrangements? Do you need additional support?

Long-Term Loss of Income and Reputational

Impact. As long as the public thinks your product

is unsafe, they’ll avoid your product. Retailer and

consumer confidence must be restored. That takes

deliberate action that is often the job of crisis

communications experts who can help you reassure

consumers and your partners up and down the supply

chain that you can be trusted. Otherwise you’ll risk

losing shelf space to a competitor, a situation that

could last long after the pandemic is behind us.

Change in Consumer Behavior. People are buying

in bulk, shopping less often, and ordering online.

We’re learning more about consumer demand and

behavior in recent weeks than we could have ever

imagined. Some processors are making bigger

packages of products. Others are limiting the variety

of products or sizes they offer. Some shoppers are

opting for more shelf-stable products and buying less

fresh food. We’re being forced to eat more at home

and limit – or eliminate – our meals out. Which of these

new shopping habits stick has yet to be determined,

but it’s never too early to think about how to capitalize

on these changes in consumer behavior.

Role of Emerging Technology. While effective

quality control and good manufacturing processes

have been the cornerstone of food safety for quite

some time, technology could make us more efficient.

We’re learning more every day about how blockchain

and Artificial Intelligence can be used to identify the

source of an issue, track products, and determine

whether a unit was impacted. This is the type of

information that can help you more effectively execute

a recall. If and when that’s the case, your retailers and

even your insurers may require you adopt it.

A crisis may be unpredictable, but it should not be

unforeseeable. So while your traditional recall and

crisis plans may not have considered the reality of

a pandemic, you should realize now it’s possible.

And with that, you have some insight about how

the world has changed. Take the time now to make

sure you are prepared to efficiently handle a recall

– from immediate logistics needs to long-term crisis

communications and reputation management.



Before we dig into the numbers, take note that the

first quarter FDA and USDA data can offer reminder

of distinct differences in FDA and USDA regulatory

oversight and enforcement.

FDA is a more active food regulator because safety

regulation is its only role. It is also responsible for

significantly more products with higher risk profiles.

For example, things like undeclared allergens – often

the leading cause of FDA recalls – is not a common

safety concern for the meat industry.

Since it’s inception, the primary role of the USDA, on

the other hand, has been to promote agriculture in the

U.S. and support sales of commodities overseas, which

could be seen to run counter to safety regulation. Keep

in mind that it’s food safety scope is a fraction of the size.

But it’s not just their regulatory purview that is

different. We’d be remiss to not mention that while

USDA keeps inspectors onsite at meat and poultry

plants, actual recalls are relatively rare. In fact, these

inspectors have remained on site even during the

COVID-19 outbreaks.

Meanwhile, FDA relies on the collaboration and

support of state food and consumer-product

regulators. In fact, an increasing percentage of FDA’s

on-site food inspections and data-gathering have been

performed by state officials. It’s a difference in how

they get the job done. While it doesn’t necessarily

reflect the reason for the discrepancy in recall volume,

the context is important when analyzing recall and

enforcement activities.

The FDA announced 141 recalls impacting more than

8.8 million units. While this represents a 9.6% decrease

in the number of recall events for the quarter, it

remains in line with the average number of quarterly

recalls over the last three years.

Undeclared allergens was the top cause cited in FDA

food recall announcements for the 11th consecutive

quarter, accounting for 39.7% of recalls. But when

you examine recalls by the number of impacted units,

bacterial contamination was top culprint for the

second consecutive quarter, accounting for 58.1%

of recalled units.

Prepared foods were the top product category

impacted in terms of both events (29.8%) and

units impacted (32.5%). In fact, 27.7% of bacterial

contamination recalls were prepared foods. Of all

recalls resulting from undeclared allergens, 37.5%

were prepared foods.

19.9% of the FDA fresh and processed food recalls

were of products distributed nationwide. 133 unique

companies issued recalls in the first quarter, with just 7

companies announcing more than one recall.

USDA recalls plummeted 78.6% to 6 recalls in the first

quarter, impacting just over 22,500 pounds of product,

a more than 99.4% decrease compared with the

previous quarter. Undeclared allergens were the cause

of 4 of those recalls, while more than half the pounds

recalled were due to the lack of an inspection.

Half the number of USDA recalls impacted beef

products and seafood products.

While the number of USDA recalls may seem low in

comparison to recent months, in fact, they remain

consistently high in an historic context. Going back to

2009 through 2014, for example, recorded meat recalls

typically totaled five or six for an entire year. Once

the federal government imposed stricter reporting

requirements starting in 2015, however, that number

started to rise to today’s current levels.

FDA

USDA

N U M B E R O F U S DA R E C A L L S B Y Y E A R

30

35

25

20

15

10

5

0


60

45

30

15

0

Che

mic

al C

onta

min

atio

n

Qua

lity

Bact

eria

lCo

ntam

inat

ion

Und

ecla

red

Alle

rgen

s

Fore

ign

Mat

eria

l

Q1 2020Q4 2019Q3 2019Q2 2019


The automotive industry is in a unique position.

On the regulatory front, NHTSA’s Office of

Defects Investigation (ODI) and Office of Vehicle

Safety Compliance (OVSC) have been operating,

and ODI is reviewing consumer complaints as

usual. So while showrooms have closed and

car sales have dropped, recalls have continued

at the same pace, and COVID-19 is unlikely to

have a significant impact on recall volume like it

would for other industries.

Car dealers and repair shops have often been deemed

essential businesses, meaning at least some are open to

serve customers. While that may be the case, we also know

that consumers aren’t driving like they used to. That means

the long tail of recall repairs will lengthen even further as

cars sit in driveways, parking lots, garages and on streets

across the country.

It may sound strange, but what some automakers actually

need to be most worried about is their involvement in

producing medical devices to support the COVID-19

response. The FDA is a whole new world compared with

NHTSA regulations. So while a loyal owner may not expect

you to be the best ventilator manufacturer, any negative

publicity about a medical device recall has the potential to

impact your reputation.

AUTOMOTIVE

The long tail of recall repairs will lengthen even further as cars sit in driveways, parking lots, garages and on streets across the country.”


Over the last 20 years, the Edelman Trust Barometer has measured the trust people

have in business, government and media. In the last 6 months, the study has looked

at how people are judging the responses of these institutions to the COVID-19

crisis. A key finding from this report is that expectations of the business community

to protect customers, employees and society at large have never been higher.

COMPANIES MUST GO ABOVE AND BEYOND TO MAINTAIN PUBLIC TRUST DURING COVID-19 ERA RECALLS

In fact, 86 percent of people expect businesses to act

as a safety net, stepping in to fill the void left by local

and federal government. Nearly two-thirds said that

how brands respond to the pandemic will have a ‘huge

impact’ on their likelihood to buy their products in the

future. These numbers mean that companies won’t be

given a pass for perceived inaction or delays on the

side of the regulator. Consumers expect companies to

stay vigilant and demonstrate a bias towards action to

protect them – now more than ever.

With that in mind, here’s three things companies need

to think about.

Make it easy for consumers. Research shows us

that one of the biggest factors contributing to recall

effectiveness is what the corrective action plan requires

of the consumer. Consumers are unlikely to comply

with the recall if the “cost of compliance” exceeds

what seems reasonable to the consumer. In other words,

if getting a car repaired, or obtaining a replacement

component for a car seat, is too complicated, time

consuming or costly, consumers are unlikely to comply.

Now think about what that means during COVID-19.

The bar for “what seems reasonable to the consumer”

has risen dramatically. In the case of vehicles, people

are driving far less, if at all. Responding to a recall

notice is likely at the bottom of the priority list. And if

too much time passes, that initial recall notice will be

forgotten completely. Automakers must keep this in

mind when considering corrective action plans, and

get creative in finding ways to get cars repaired in a

timely fashion.

Effective communication will be a challenge.

National media remain hyper-focused on the political,

regulatory and economic implications of COVID-19.

While trade media will continue covering NTHSA’s

actions and automotive recalls closely, the average

recall is unlikely to gain traction with national media,

mitigating potential reputational damage to the brand.

But while the lack of media attention could help

the company reputationally, it could depress

recall effectiveness. In particular, this could impact

manufacturers of motor vehicle equipment, who rarely

have a comprehensive list of owners and purchasers.

Instead of personal notification by first-class mail,

product and equipment manufacturers may need to

rely on other channels, including media coverage, to

reach consumers. But breaking through the COVID-19

noise will be difficult, so manufacturers will need to be

more diligent about using an omni-channel approach

to connecting with consumers wherever they may be.

Additionally, owning the narrative surrounding the

recall announcement is even more challenging if you

have no way of gaining traction in a chaotic media

environment. Consumers may end up hearing about

a recall from friends or relatives, social media, forums

like Reddit or on search engines. These platforms

tend to be less reliable for providing accurate

information and are also more difficult for companies

to police and fact-check. Companies implementing

recalls will want to consider investing in more

resources than normal, like paid media or Google Ad

Words, to ensure consumers are directed to reliable

information about a recall.

Operational and logistical challenges could

ultimately harm your reputation. COVID-19 poses

significant operational and logistical challenges during

normal business, but those issues can become more

acute during a recall. Given the current operating

environment in which many businesses have limited

hours or modified customer service policies,

implementing a corrective action plan could require

closer coordination with dealers, fleet managers,

Original Equipment Manufacturers and other parts

suppliers. In the case of motor vehicle equipment and

product, implementing a remedy and then getting

parts to consumers is perhaps even more challenging.

In both cases, it will be critically important that all

stakeholders who are consumer-facing are working in

lockstep, communicating consistently about the recall

and remedy, and monitoring for inbound inquiries and

feedback from consumers.

The silver lining we have in this current moment is that

trust in institutions is at an all-time high. Unfortunately,

we also know that large trust gains are often quickly

lost, particularly for companies who mismanage product

safety issues. There’s never been a more important

time to go above and beyond for your customers.

JARED NELSON, VICE PRESIDENT, EDELMAN



NHTSA recalls in the first quarter dropped 17.5% to

198 recalls, which still equates to more than 2 recalls

every day in 2020 so far. These recalls impacted more

than 28 million units with an average size of 142,111

units – both representing the highest levels since the

second quarter of 2016. This can be attributed to a

major airbag recall that impacted 10 million units,

along with four additional recalls affecting a collective

11.8 million units – that’s five recalls that accounted for

77.8% of all recalled units.

Automobiles were the largest category impacted by

NHTSA recalls at 88.9%. Six recalls impacted tires – the

highest recorded since the third quarter of 2012.

Equipment was listed as the cause of 19.2% of recall

events, making it the top cause of recall events for

11 of the past 12 quarters. Airbags accounted for

the greatest number of recalled units (60.1%) despite

making up just 11.1% of recall events.


0

N U M B E R O F R E C A L L S B Y C AT E G O R Y

200

150

100

50

0

Auto

mob

ile -

Equi

pmen

t

Elec

trica

lSy

stem

Auto

mob

ile

Equi

pmen

t

Air B

ags

Auto

mob

ile -

Tire

Serv

ice

Brak

es

30

35

40

25

20

15

10

5


CONCLUSION ABOUT STERICYCLE EXPERT SOLUTIONS

We are risk managers. We are problem solvers.

We are crisis managers.

When your reputation is on the line, we put our

20+ years of global experience on 5,000+ recalls

affecting 500MM+ units to work for YOU. No one knows

more about the recall and regulatory process than we do.

Through that lens, we’ve seen industries evolve based

on changing legislation, advancements in technology,

shifts in consumer preferences and behaviors, and

the growing complexities brought about by the

transformation of supply chains.

But we haven’t just watched it, we’ve been part of it.

We’ve helped companies around the world prepare

for and adapt during some of the most challenging

events in their history.

So while we predict change in 2020 (and beyond),

it’s nothing we haven’t seen or dealt with before. In

fact, it’s often that these events, even what feels like

a devastating product recall, offer opportunities to

demonstrate trustworthiness and to build greater

customer loyalty.

Stericycle Expert Recall’s extensive resources, combined

with our unmatched experience handling thousands

of recall events, give us a unique perspective on the

risks, challenges, and often overlooked opportunities

associated with all types of reputational threats.

Website: StericycleExpertSolutions.com

Telephone: 1.888.732.3901

Email: [email protected]

LinkedIn: Linkedin.com/showcase/expertrecall

The first quarter reminded us about how fragile even

the strongest business is. Whether it’s your reputation

or your entire business model on the line, we are learning

there is far more we can do to prepare for product safety

challenges. We admit that none of these are novel. But

the environment we all find ourselves in in this moment

place a new emphasis on their importance.

Manage your Supply Chain. We’ve talked about

supply chain challenges many times before. But what

it comes down to in the COVID-19 era is this: Do

you trust your suppliers, manufacturing plants, and

processing plants to live up to your quality and safety

standards 100% of the time? If not, it’s probably an

issue you need to address sooner rather than later.

Support Your Team. The added stress and pressure

now felt by individuals up and down your organization

make mistakes much more likely to occur. Knowing

that, take the opportunity to identify vulnerabilities

and assess potential risks. Pinpoint possible missteps

that could cause a slip in quality or potential

contamination and implement additional measures to

prevent them. But also realize reputational risks aren’t

exclusively tied to your quality and safety departments.

Is your sales team adequately prepared to work with

retailers and business partners? Can your customer

service team handle consumer call volume?

Consider What Retailers are Going Through.

Retailers may feel compelled to respond to product

shortages, recalls or other supply related issues by

making long-term adjustments to their product offerings.

Failure to take this into account in working with your

customers may put your product on the chopping block.

Stay Engaged with Consumers. Reaching

consumers to share product recall or other safety

related information will be more challenging than ever

before. The focus of so many journalists and news

organizations is almost solely on the pandemic. And

even if companies are able to get the attention of a

news outlet, will consumers notice it? Be prepared for

the possibility of “rolling recalls” – not because you did

anything wrong the first time, but because it will take a

few times to get everyone’s attention. The trick? Take

the bull by its horns and make the recall announcement

again before regulators tell you to. You’ll be in control

of the message and you will demonstrate to regulators

that you’re taking the event seriously.

Be Smart about Regulatory Environments.

If you are one of those companies that stepped

into a new regulatory environment to help with

COVID-19 response, get smart about your regulatory

requirements. You might be able to get away with more

now than you will 24 hours after the country reopens

and enforcement discretion is lifted. You certainly

don’t want to risk your reputation for a product you

never intended to manufacture long-term.

Plan for Disruption. If COVID-19 taught us one thing,

it’s how many distractions and business interruptions

can be caused by a single event completely out of our

hands. If you haven’t reviewed your crisis management

and recall plans already, make sure it’s on your to-do

list when the storm cloud has passed. Regardless, the

next time you brush off those plans, think about how

you can prepare for disruption in every sense. It could

be things like extra support for your customer service

center, more storage space, or access to additional

resources to move product. Evaluate what you can

control, how you can prepare for it, and lock it in place.

There’s so much we can learn from this moment we

are living in now. Sure, we are all eagerly awaiting to

return to “normal” in the coming weeks or months.

But if we’re honest with ourselves, we will admit that at

least parts of our current lifestyle will stick around for

a while. Whether it’s how we run our business, the way

we earn a living, or how we shop as consumers. But by

working together, the hope is we can find a balance

that allows everyone to be successful, happy, and safe.

49

http://www.StericycleExpertSolutions.com

mailto:AskTheExperts%40Stericycle.com?subject=

http://Linkedin.com/showcase/expertrecall

Website: StericycleExpertSolutions.com

Telephone: 1.888.732.3901

Email: [email protected]

LinkedIn: Linkedin.com/showcase/expertrecall

Q1 2020 RECALL INDEX

ALL INDUSTRIES: UNITED STATES EDITION

q1 2020 recall index · q1 2020 recall index: product recall data trends and predictions for us...

Documents