Recall Trends in MedTech and Pharma: Rising Risk, Growing Exposure

Product recalls across the medical device and pharmaceutical industries increased again in 2024, extending a post-pandemic trend that continues to raise product risk exposure. While recalls are not new to either sector, their frequency, severity, and financial impact are increasing, and many organizations remain underprepared for the operational realities that follow.

Recall risk is no longer limited to isolated manufacturing defects or compliance issues. It is now an enterprise-level risk shaped by product complexity, global supply chains, and heightened regulatory expectations.

Recall Activity Continues to Rise

Medical device recalls reached a multiyear high in 2024, increasing from 2023 and continuing a broader upward trend across industries. Industry data shows device recalls rose by 8.6%, totaling approximately 1,059 events. Class I recalls, the most serious category, reached its highest level in 15 years.

Pharmaceutical recalls remain lower in overall volume but continue to fluctuate year over year. Research shows drug recalls have increased over time, most often driven by contamination or quality control failures.

For risk leaders, these trends signal more than regulatory pressure. Rising recall activity reflects broader challenges related to product safety, manufacturing controls, and supply chain resilience. When not properly addressed, these issues can create significant financial and operational exposure.

Different Products, Different Recall Drivers

Although both industries operate in highly regulated environments, the underlying causes of recalls often differ.

Medical device recalls are most commonly linked to:

• Design or engineering flaws
• Manufacturing defects
• Labeling or packaging errors
• Software malfunctions and digital failures
• Increasing sterility issues, particularly for implantable devices

As devices incorporate more software, connectivity, and advanced functionality, recalls tied to system performance and reliability are becoming more frequent.

Pharmaceutical recalls are typically driven by:

• Sterility failures
• Microbial or chemical contamination
• cGMP compliance issues
• Potency deviations
• Labeling or packaging mix-ups

While drug recalls occur less frequently overall, they often involve products where failures pose immediate and serious health risks.

Recall Severity Is Increasing

Most recalls in both sectors continue to fall under Class II classifications, meaning they may cause temporary or reversible health effects. However, Class I recalls are becoming more prominent, particularly in the medical device space.

This shift has clear consequences:

• Faster regulatory action and public notification
• Greater scrutiny from customers, distributors, and healthcare providers
• Increased pressure to act quickly and communicate clearly

Severity affects more than patient safety. It also drives reputational risk, operational disruption, and financial exposure.

Understanding the Coverage Gap

A common misconception is that General Liability or Products Liability insurance will respond to recall costs. In most cases, that is not how these policies work.

• GL and Products Liability policies are designed to cover bodily injury and property damage claims
• Recall-related costs are typically excluded
• Any recall-related coverage under GL policies is usually limited and narrowly defined
• Dedicated recall endorsements are uncommon and often restrictive

Product recall insurance exists to prevent liability claims, not to respond after an injury occurs. Most recall expenses arise before any bodily injury takes place, which is why traditional liability coverage generally does not apply.

What Recall Costs Actually Include

Recall expenses often extend far beyond removing products from the market. Common cost categories include:

• Manufacturing replacement products
• Redistributing or reinstalling replacements
• Refunds or repurchase programs
• Transportation, logistics, storage, and handling
• Safe disposal or destruction of affected products
• Customer communications, public notices, and regulatory reporting

Organizations may also face third-party recall costs, business interruption, and reputational damage, particularly when distributors, healthcare providers, or downstream customers experience losses.

These costs can accumulate quickly, even when no bodily injury claims occur.

Who Can Trigger or Enforce a Recall?

Recalls are not always initiated by manufacturers alone. In practice, they may be triggered or enforced by:

• Manufacturers acting voluntarily
• Government authorities issuing mandatory recall orders
• Retailers or distributors applying commercial pressure
• Consumers, healthcare providers, or whistleblowers raising concerns
• Crisis consultants or insurers recommending corrective action

This multi-stakeholder environment often requires recall decisions to be made quickly and with limited information.

What This Means for Risk Leaders

The recall environment in MedTech and Pharma continues to grow more complex. Key takeaways include:

• Recall risk is increasing, even for well-managed organizations
• Supply chain and digital risks are now common recall drivers
• Recall severity and regulatory expectations continue to rise
• Traditional liability coverage often leaves significant gaps
• Recall readiness is as important as prevention

Product recalls may never be entirely avoidable. However, organizations that understand recall trends, recognize coverage limitations, and prepare for response requirements are better positioned to reduce disruption, protect patients, and manage financial risk.

If you have questions about recall exposure, coverage considerations, or recall preparedness, contact Hylant to start a conversation with our team.

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.