Q3 product recalls tip U.S. further into record-breaking year

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Dec 01, 2022, 10:00 ET

Sedgwick brand protection releases U.S. product recall index for Q3 2022

MEMPHIS, Tenn., Dec. 1, 2022 /PRNewswire/ -- Third-quarter U.S. recall data show that the number of products recalled this year has officially reached a 20-year high. According to the U.S. product recall index released by Sedgwick's brand protection division, 1.22 billion units have been involved in recalls across the five industries tracked in the index, breaking the previous record of 1.20 billion set in 2018.

Since Sedgwick began tracking recall data more than two decades ago, this is the largest number of product recalls in any given year, and that has been achieved with a full quarter still remaining in 2022. The overall rise was driven primarily by increases in the average recall size for the pharmaceutical and medical device industries. Both industries saw their average recall size grow by more than 500%.

As the number of products recalled continues to increase, manufacturers face evolving challenges related to regulatory activity, ongoing geopolitical issues, supply chain disruptions, and an uncertain economic future.

Released quarterly, Sedgwick's industry-leading brand protection report offers an in-depth analysis of important challenges ahead for the automotive, consumer product, food and beverage, medical device, and pharmaceutical industries and provides insights for mitigating product-related crises. The report breaks down the latest product recall data and trends from the third quarter of 2022, along with providing insights, analysis, and predictions from Sedgwick's brand protection experts and our network of strategic partners.

Highlights from third quarter recall data

While automotive recalls increased by 2.9% (to 252 events), the number of impacted vehicles fell significantly (from 9.21 million in Q2, to 5.23 million in Q3). Only two quarters in the last 10 years have experienced smaller average recall sizes.
Consumer product recalls experienced a very slight increase to 66 events in the third quarter, up from 65 in Q2 2022. The number of units recalled decreased by 19.2% to 5.43 million in Q3 2022.
While U.S. Food and Drug Administration (FDA) food and beverage recalls fell 18.3% (to 98 events) in Q3, their average size increased 158.3% to 592,121 units. In contrast, U.S. Department of Agriculture (USDA) food recalls increased by one, to 14 events in Q3 2022, with their average size falling 56.4% to 32,631 pounds.
Medical device recalls decreased 16.8% in Q3 2022, down to 223 events. However, the number of units impacted increased significantly by 411.0% to 51.48 million.
While the number of pharmaceutical recalls fell 13.8% to 81 events in the third quarter, year to date, the industry has experienced the second highest number of units recalled on record, with 107.19 million units impacted.

Looking ahead to 2023

As the automotive industry continues to focus on sustainability, the U.S. government passed the Inflation Reduction Act, which offers a slate of benefits meant to increase uptake of electric vehicles. However, manufacturers will face similar supply chain challenges as they work to meet demand. Over-the-air (OTA) updates have increased in prevalence, which make it easier for manufacturers to complete recall requirements. Regulations may be forthcoming as states' lawmakers and regulators seek to clarify the delivery process for OTA updates.
In the consumer product industry, the Federal Trade Commission (FTC) has taken a leading role in protecting consumers' 'right to repair,' acting against companies that it alleges are restricting consumers' choices. State governments are following suit, with New York lawmakers working to pass comprehensive 'right to repair' laws. Other states and even federal regulators are likely to join the efforts with new laws.
Change may be coming to the food and beverage industry, as some members of Congress have indicated a desire to overhaul food regulation in the U.S. by establishing a single food safety agency. The Food and Drug Administration (FDA) continues to feel the impacts of the infant formula shortage earlier this year, releasing an internal report on its response that offered recommendations for areas of improvement.
In the medical device industry, the Food and Drug Administration (FDA) issued a final guidance that seeks to clarify the types of Clinical Decision Support (CDS) software functions that fall under the definition of "device." Sections of the guidance may indicate that the FDA will be more active in regulating CDS functions as Software as a Medical Device (SaMD), presenting new challenges for manufacturers.
During the third quarter, the Food and Drug Administration (FDA) appeared to more closely monitor compliance with the Good Manufacturing Practice (GMP) processes, issuing four warning letters to companies in under two months. Increased regulatory scrutiny is likely in the fourth quarter, as the FDA continues remote regulatory assessments and will likely continue to issue warning letters related to over-the-counter drug products and potential GMP violations.

"Regulatory activity did not slow down in the third quarter, and we can expect regulators and lawmakers to continue their close scrutiny of compliance and processes in every industry," cautioned Chris Harvey, Sedgwick senior vice president of brand protection. "Economic uncertainty and ongoing geopolitical issues, as well as continued disruptions to supply chains, will pose larger risks for businesses. They'll need to pay close attention to regulatory activity at the state and federal level and routinely evaluate and update their product recall, crisis, and communications plans to account for emerging risks."

The recall index is published every quarter by Sedgwick's brand protection experts. It is the only report that aggregates, and tracks recall data across multiple regulatory agencies and industries to help industry stakeholders navigate the regulatory environment, product recalls and other in-market challenges, please visit www.sedgwick.com/brandprotection

To download the latest report, visit the U.S. product recall index report.

About Sedgwick
Sedgwick is a leading global provider of technology-enabled risk, benefits and integrated business solutions. The company provides a broad range of resources tailored to our clients' specific needs in casualty, property, marine, benefits, brand protection and other lines. At Sedgwick, caring counts; through the dedication and expertise of nearly 30,000 colleagues across 80 countries, the company takes care of people and organizations by mitigating and reducing risks and losses, promoting health and productivity, protecting brand reputations, and containing costs that can impact performance. Sedgwick's majority shareholder is The Carlyle Group; Stone Point Capital LLC, Caisse de dépôt et placement du Québec (CDPQ), Onex and other management investors are minority shareholders. For more, see sedgwick.com.

SOURCE Sedgwick