What is the cost of a warning letter?
Research by: CompuCal Calibration Solutions
The cost of a warning letter can be very high depending on the size of the company and the severity of the issues. It can be debilitating for some small to medium sized life science companies. For larger life science companies, the reputation damage could be impossible to manage. Moreover, it means a lot of time spent on meetings, evaluation, redesign, training and additional pressure to the employees. It also means that everyone, including competitors, partners and customers, can read in detail the areas where the company is not compliant. The final cost can be from hundreds of thousands of dollars to millions.
Here are the main ways a warning letter can impact the company:
1. Operational impact:
Internal teams from different departments have to come together to address the issues within the FDA’s deadline. That means time and resources will have to be used to respond to the warning letter instead of the main operations and production. More specifically, the company will need to dedicate QA and engineering resources to manage the full clearing process. Finally, it’s possible to lose personnel because of the huge stress this situation can bring.
2. Reputation damage:
Warning letters are shared publicly. If it draws media’s attention, it can create a huge wave of reputation crisis and hiring public relations consultants was never cheap. This can affect the share price and it is very difficult to recover from. Let alone that competitors can take advantage of the situation and take control of the market.
3. Loss of market share:
In severe situations, other companies may delay, postpone or cancel contracts with the company. Reputation damage also leads in decrease of sales.
4. Recall of products:
The cost of recalling a product and the reputation crisis that could be caused is considerable. In the Life Sciences industry things can be even more complex since a warning letter could also have an impact on new product approvals.
5. Cease activity:
In extreme situations, when there is no solution, the production facility can shut down.
What is your estimation on the cost of a warning letter for your business?
Some of most common FDA observations for both life sciences and food industry relating to calibration issues are:
- No formal procedure in place for calibration execution and deviation management.
- Not following procedures.
- Missing documentations and certificates.
Check our blog to read more about FDA observations here.