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Who pays for correction and removal actions?

A

Aj_Grant

#1
Hello everyone,

I am looking for information about who is responsible for (from a regulatory perspective) fixing an issue related to a recalled device?

I cant find any statements in any regulations regarding cost responsibilities.

Is there a way to decide when a manufacturer is responsible versus when a customer can be expected to cover the cost of a fix?
 
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JeantheBigone

Quite Involved in Discussions
#2
If the recall is related to a design flaw or manufacturing defect, why would the customer be responsible for covering the cost of the correction? I'm having trouble visualizing that scenario.
 
#3
Although I've never looked, I'll bet the regulations will not give you any guidance on costs allocation because the USFDA does not care one iota about who pays for the correction and removal, they only care that the device is removed/corrected. The FDA is not there to manage manufacturer and customer relationships, nor is it their place.

The short answer to your question is that the whoever is at fault is ultimately legally responsible for the costs, unless there is an agreement to the contrary between the manufacturer and the customer.

The longer and more practical answer is that the customer may have no choice but to bear the initial costs of a correction and removal action, especially if the manufacturer is abroad, and then be stuck seeking reimbursement from the manufacturer (or hopefully the manufacturer's product liability insurer). The customer will be financially exposed. If the customer's name is on the product then they are further incentivized to act with or without manufacturer's support to prevent brand and reputation damage.

Where this can run into problems is where the manufacturer and the customer disagree on what action is required or how to approach it. The customer holds the cards and control here, but if the manufacturer doesn't agree they will fight about costs. The manufacturer may want to take a Hyundai (adequate and inexpensive) approach while the customer may want to take a BMW (elaborate and expensive) approach, not only to comply and reduce risk, but also send a message to the market. Should the manufacturer pay for that portion of the costs that relates to the customer's message to the market? Maybe?

In a better case scenario, the manufacturer and the customer will work closely together to jointly determine a correct, adequate and good response. Costs will be forthcoming from the manufacturer or (better yet) the manufacturer's insurer. They will exhibit unity and both be interested in sending a message to the FDA and the market that they care about quality, safety and health impacts of their devices. They will hold hands and walk off into the sunset, their relationship having grown stronger from coming together in this difficult moment.

Relevant quote from my mentor: "When something is broken, the first thing we fix .... is blame!"
 
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