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Pharmaceutical companies should prepare for the impact of recalls to minimize risk to consumers and the company.
Drug recalls impact scores of pharmaceutical companies every year, putting both consumers and brand reputations at risk. Pharmaceutical recall activity has seen a disturbing rise not only in the volume of products recalled, but in the severity of risk to consumers (1). The lesson for pharmaceutical companies is to be prepared in order to minimize risk to consumers and themselves should a recall happen.
In the second quarter of 2017, the volume of recalled drug units climbed 444% over the previous quarter, making it the most active quarter since the fourth quarter of 2014. Most concerning was the number of recalls for Class I situations: safety issues that pose the highest risk of serious adverse consequences or death. There were 11.6 million Class I pharmaceutical units recalled in Q2, making it the highest since at least 2004. The key causes of recalls ranged from subpotent and superpotent active ingredients to product mislabeling to drugs found with foreign material like hair. And all this recall activity is happening in an industry that is experiencing more rigorous testing and regulatory scrutiny.
Having proper quality control processes in place is paramount, but the reality is that even the most diligent pharmaceutical manufacturers will experience recalls. If caught unprepared, a recall can have devastating consequences on a company’s reputation, market share, and bottom line. But with the proper planning and systems in place, a recall event can be effectively managed to mitigate financial and legal risk, increase customer loyalty, and prevent irreparable brand damage.
The first step is to identify all the industry complexities so that companies can create a clear plan for handling pharmaceutical product recalls, retrievals, and returns. With over-the-counter drugs, for example, both the manufacturer and retailer must undertake the daunting task of notifying consumers during the recall process. The wide distribution and use of these products complicates the logistics of their removal. Recalls require systems for tracking and monitoring for the return process.
There are also complex regulatory requirements for coordinating the notification and response, product retrieval, storage, and ultimate product disposition. Effective recall preparedness requires immediate access to pharmaceutical distribution lists to reach vast networks of retailers, pharmacies, medical providers, and-most importantly-patients. Unfortunately, many pharmaceutical companies have gaps in their distribution networks, which can delay their recall response.
The silver lining of the growing pharmaceutical recall activity is that a number of best practices have emerged to help companies be better prepared to weather the storm. The first is to develop a plan that designates an internal recall coordinator, recall team members, and the necessary steps to take. A solid recall plan helps facilitate quick action to locate the affected pharmaceutical, remove it from the marketplace or from consumers’ homes, and determine a reimbursement or replacement strategy.
Every recall plan is different, though there are several broad components that are universally applicable, including defining and establishing responsibilities of the recall management team. This section of the plan should include a clear outline of the specific authority and responsibilities of each individual, department, and affiliate. The plan should also include contact information for each member of the recall management team, backup personnel, and any partners needed to assist in the recall execution.
Once all of the plan elements are in place, pharmaceutical companies should conduct an initial mock recall to evaluate how their teams and procedures would function in a real-life scenario. Not only does this help individual stakeholders and departments prepare for a recall, it also enables organizations to make necessary updates and improvements to their recall plans before a recall actually occurs.
There is no one-size-fits-all approach to recall planning, and the same holds true for testing a plan’s effectiveness. Mock recalls must be customized to suit the individual needs and characteristics of a pharmaceutical company. Yet there are several best practices that are broadly applicable. Recalls involve multiples phases and processes, and it’s important that each step is hypothetically addressed during a mock recall. As such, companies must run their teams through simulations that mimic their most likely recall scenarios. Only then can they effectively evaluate the decision-making and logistics of each phase as the recall simulation unfolds.
Pharmaceutical companies also need to understand industry standards and recall regulations that govern them. FDA has five classifications of recalls (Class I, Class II, Class III, Market Withdrawal, and Medical Device Safety Alert) based on the severity of potential problems with the product. An FDA recall curriculum (2) provides the resources to process, classify, and publicize recalls on time, as well as determine which specific course of action is required for a specific classification of recall.
Investing in recall insurance is another practical step. Many standard liability policies already have recall endorsements, but this can easily give policy holders a false sense of security. These standard endorsements often fall short of covering all the expenses a pharmaceutical company will face when it has to execute a recall. Specialized insurance coverage, on the other hand, covers recall preparation support, as well as direct expenses, including logistics and crisis communications assistance. Companies considering recall insurance policies must conduct careful risk assessments and shop wisely for the appropriate level of coverage.
The last issue is data. Companies need to assess if they have sufficient system resources for collecting data throughout each step of the recall process. And if so, can they efficiently run reports to access critical information in near real-time?
Pharmaceutical companies face unique challenges in an industry where increasing regulatory scrutiny is the norm. Proactively identifying industry complexities can help manufacturers create a clear plan for handling pharmaceutical product recalls, retrievals, and returns. Establishing the most appropriate infrastructure is a crucial first step in successful planning and execution. Working with a recall consultant ahead of time can also help companies work out the preparedness steps outlined above. Preparedness helps guarantee a company’s solid, efficient response when a recall event actually occurs. Taking the time to adequately prepare for each likely recall scenario can make the difference between an effective recall with a quick resolution or one that has a negative impact on brand reputation and revenue.
1. Stericycle ExpertSolutions, Q2 2017 Recall Index, Stericycle ExpertSOLUTIONS