TO ADEQUATELY PROTECT AND DEFEND A COMPANY AS WELL AS MITIGATE THE RISK OF SELLING PRODUCTS IN THE US, NUMEROUS PROCESSES AND PROCEDURES NEED TO BE IMPLEMENTED.
Product Liability Risk Management-
Companies that sell products in the US have to be worried about product liability related litigation as well as class actions and government investigations. Product liability claims, product recall cases and related litigation not only hurt a company's brand image and reputation but also results in the enormous expenditure of litigation costs and legal fees including costs related to product incidents, lost profits, management and employee time as well as increased insurance costs and recall expenditures. To defend and mitigate the risk of product liability litigation in the U.S., companies should focus on processes that prevent potential product liability claims and litigation that can prevent or minimize not only lclaims and litigation but the exposure of legal fees and costs. As potential sources of product liability include product design issues, manufacturing and distribution issues and product promotion and service issues, it is only fitting that most processes and procedures that I recommend to limit exposure to product liability claims cover such areas of risk. Such processes to manage prouct liability risk are summarized in checklist form below. If used properly they can prevent, minimize and transfer a company's product liability risk.
- Product Risk Management Goals.
- Encourage correct product use, increase customer satisfaction and minimize possible injury from use.
- Improve ability to defend the company in the event of litigation by developing and substantiating defenses to liability, reducing exposure to liability, for example, by removing grounds to impose punitive damages.
- Assist in assuring regulatory compliance. How robust is the company’s compliance procedures?
- Adopt Product Loss Control Policy and Procedures which include:
- Requiring product group or divisional officers to develop programs consistent with corporate guidelines.
- Establishment of a group Claims Defense Committee.
- As a part of the Research – Design – Development process, conduct formal hazard/failure evaluations on all new products.
- Publish Quality Control Standards and Procedures for all components, materials, and processes critical to product, service, safety, and reliability.
- Obtain Certificates of Insurance – Vendors endorsements – Hold Harmless Agreements from suppliers and sales outlet.
- Establish guidelines for development and review procedures manuals, instructions and labels.
- Product Management Consideration Respecting Limiting Potential Liability Exposure – Develop Checklist to include in Product Readiness Approval Objectives.
- Product Design Considerations
- Written procedures for the design program, including:
- Design choices – consideration of alternatives.
- Specifications – definition of acceptable ranges of variation for each characteristic to assure that all designs are reviewed before they are released to manufacturer.
- Establish design review committee.
- Establish written procedures for the development of specifications, and procedures that verify that specifications are accurately embodied in design.
- During the Design – Evaluation and Consideration of:
- Users/owners of the products – tailor labeling (e.g., instructions for use, warnings, contraindications) to the users level of expertise.
- Determine types of people likely to be exposed to the product, consider unique risks to these groups.
- Tailor labeling and develop safety features to address the unique risks to the intended users.
- Establish a labeling review committee.
- Consider intended users/operations:
- if general consumers will be using the product: develop labeling that is non-technical and easy to understand, warn against all risks, including obvious risks, clearly state hazards and warn about consequences of improper use.
- if professional operators will be using the product: specify on the labeling that only qualified personnel may use/operate the device, stress contraindications and warn against unapproved uses, develop labeling that is easy to follow.
- Provide users with clear and concise directions, information, and precaution for use.
- ensure that the label is accurate, complete, visible and easily understood.
- provide information on labels affixed to the product or through inserts, packaging, or accepted pictographs.
- when it is not feasible to provide full information on a label affixed to the product, affix a label that refers users to inserts, handbooks, packaging or pictographs that will provide full information.
- Review all inserts and information on packaging for accuracy, and to assure that they are consistent with other labeling.
- Conduct Post-Sale Monitoring of Labeling
- Monitor adequacy and accuracy of labeling.
- Establish field service reporting to Loss Control Committee on how devices are used in the field and to give information on service and maintenance problems caused by users who misunderstand the labeling.
- Evaluate complaints failures and malfunctions.
- Evaluate all failures and malfunctions to determine whether they were caused by poor labeling or by user misunderstanding of the labeling.
- Monitor labeling practices in the industry.
- Review all published statements about the products including advertising, product listings and catalogues to assure that they do not: mislead users, encourage users to disregard directions and warnings contained in the labeling, or promote unapproved or inappropriate uses.
- Include provisions in distribution and purchasing agreements so that distributor and/or purchaser will:
- complete and return surveys and questionnaires
- notify the company of any product failures or malfunctions
- use the products in accordance with the instructions
- refrain from using the product after failure or malfunction
- use the product only with compatible systems
- have the product serviced only by company service personnel or entities approved or certified
- Manufacturing and Distribution
- Comply with GMP requirements or other required manufacturing standards.
- Provide for different types of testing of devices, components, and materials at different stages of the manufacturing process.
- Assure through testing that the manufactured device meets design and performance specifications.
- Conduct failure-modes-and-effects analysis for all products.
- Address quality of equipment used in manufacturing.
- Address quality of software.
- Procedures for testing of components and materials obtained from suppliers, and procedures for auditing suppliers and contractors.
- Investigations - evaluate all service related complaints according to written procedures that set forth valid and uniform criteria to determine validity, seriousness, fault, repeatability, determine whether the complaint falls within government regulatory requirements.
- Responses to user complaints - letter or general change to process, new labeling.
- Repeat or clarify instructions in labeling.
- Provide new information on proper use or risks associated with use.
- Warn against further use of an obsolete or hazardous product
- Warn against misuse or unapproved use and supply information on the risks of such use.
- Advise when the product should be repaired.
- Require field-service personnel to submit standard forms giving information on product problems and contacts with users.
- repair only products about which they have sufficient information
- disclaim responsibility for the inherent quality of other companies' products
- Product Problems
- Establish written process to evaluate new information to determine proper response with regard to:
- devices in use
- devices in manufacture
- future devices and device changes
- Establish written procedures for:
- sending new information and warnings to users
- sending notification of obsolescence
- conducting safety upgrades
- conducting recalls
- assuring traceability of products to users
- Third-Party Service Providers
- Must provide reports about service and repairs to include:
- product repaired
- nature of work performed
- equipment and materials used
- identity of user and service
- place and date of repair
- condition of the product as received
- Written procedures for certification of third party service provider. Audit to determine compliance with procedures.
- Review and Draft Manuals, Warnings and Labels and Establish a Review Committee to review:a) Instruction Manuals
- In general, instruction manuals or guidebooks should contain the following information
- The date of publication and a description of the manual(s) it is ______ any;
- Disclaimers of express or implied warranties, if appropriate;
- The name and description of the product and its overall function ___ other relevant product information, such as its model, lot, or serial number ____;
- A summary safety section at the front, directing attention to the ____ product hazards;
- Consistent restatements of all warnings that appear on product additional safety information, clearly distinguished from directions for _____;
- Review Warnings
- The warning must adequately indicate the scope of the danger;
- The warning must reasonably communicate the extent of seriousness of the harm that could result from misuse of the product;
- The physical aspects of the warning must be adequate to alert a reasonably prudent person to the danger;
- The warning must indicate the consequences that might result from failure to follow it;
- Insurance Considerations
- Conduct a risk assessment to create a business risk profile to identify factors that have the greatest financial impact and integrate appropriate risk transfer strategies to:
- Stabilize insurance costs;
- Mitigate extraordinary financial impact;
- Ensure cost effective protection against catastrophic losses;
- Leverage risk bearing capital;
- Optimize tax and accounting issues.
- Conduct an analysis of current coverages, amounts, deductibles, excess.
In summary, companies wishing to sell products in the US must do the following to reduce the risk of product liability claims, class actions, regulatory issues and related litigation. It is recommended that:
1. The company implement in the U.S.:
Loss Control Procedures
Committees to review warranties, labels, instruction manuals.
Review of all advertisements.
Review and implementation of adequate insurance policies.
Implementation of a Product Risk Management Committee.
Implement new procedures in service to address loss prevention, warnings and efficient investigations.
2. Work with the factories to implement:
Loss Control Strategies
Class Action Defense Strategies
U.S. Regulatory Issues.