Product liability reducing risks

MerlT states that a proactive risk management plan reduces product liability lawsuits, but it can also reduce drug sales "for reasons that turn out to be ephemeral." He warns pharmaceutical companies, however, that being defensive — such as described by Fitzgerald — is extremely risky. "Ongoing product liability litigation can damage a company s bottom... 

To establish a product liability claim, it must be shown that the product is defective. This term was redefined (in 1998) as follows A product is defective because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe. See the Restatement (Third) of Torts. Products Liability, issued by the American Law Institute. 

Rather than continue to spend millions of dollars annually to control the millions of tons of pollution each year, Congress decided to encourage industry to reduce source pollution through cost-effective changes in production, operation, and use of raw materials. These actions prevent pollution, and can also reduce the amount of raw materials used, limit liabilities of compliant industries, and reduce risks to workers as well as to the environment. 

The function of the label and leaflet is to inform the patient, to inform the pharmacist/wholesaler/manufacturer, to control the product in terms of its distribution and medical aspects, and to reduce the risk of product liability claims. 

For products liability the primary role of an engineer is to remove umeasonable dangers from products and prevent defects from reaching the marketplace. Eliminating risks in a product will reduce opportunities for lawsuits. Analyzing risks for a product and incorporating risk reduction in design will prevent most lawsuits. Products with few defects will produce few product injuries and even fewer liability claims. 

Gooden, Randall L., Lawsuit Reducing the Risk of Product Liability for Manufacturers, John Wiley Sons, Inc., New York, 2009. 

The second stage of the development towards risk reduction is achieved by bringing together all areas where losses arise from accidents - whether fire, security, pollution, product liability, business interruption etc. - and co-ordinating action with the aim of reducing the loss. This risk reduction strategy is synonymous with loss control. 

Significant opportunities exist for industry to reduce or prevent pollution through cost-effective changes in production, operation, and raw materials use. In addition, such changes may offer industry substantial savings in reduced raw materials, pollution control, and liability costs, as well as protect the environment and reduce health and safety risks to workers. Where pollution prevention practices can be both environmentally beneficial and economically feasible, one would consider their implementation to be prudent. 

Individuals and companies that buy insurance products could be stimulated to address climate change-seeking mechanism to facilitate mitigation of GHG emissions and adaptation to the inevitable impacts of climate change [16]. In addition, the insurance companies themselves are motivated to take significant actions to mitigate GHG emissions and increase adaptive capacity to reduce overall uncertainty and other barriers to insurability and are also motivated to limit the insurers potential exposure to catastrophic risks in excess of their capacity to avoid the potential for property and liability claims in excess. 

Accidents in which care levels of both firms and customers affect damages are called bilateral accidents. Strict liability with contributory negligence will efficiently manage risks in bilateral accidents if customers are aware of the courts due-care standard. Under strict liability with contributory negligence, consumers must engage in precautions that the court determines are cost-effective. The damages that remain after that level of care is taken are the firm s responsibility. This increases product prices and reduces purchases, an important method of accident control (Shavell 1987, 54). 

Landes and Posner (1987, 287, 295-96) argue that strict liability is appropriate when information is asymmetrically available (e.g., firms have it and consumers do not) because the product is technologically sophisticated (e.g., synthetic organic chemicals). Efficiency is served by strict liability for two reasons. First, firms can discover innovations that reduce the damages from technologically sophisticated products at a lower cost than consumers because firms usually have better access to scientific knowledge. Second, risks that cannot be eliminated cost-effectively raise product prices, which reduces sales and reduces damages. 

Strict liability is efficient only when firms can do a great deal to reduce their product risks and consumers cannot. The negligence rule becomes more appropriate as consumer behavior increasingly affects damages, firm behavior decreasingly affects damages, and knowledge about products becomes more widespread. How do the facts about chemicals relate to such institutional demands ... 

Many companies, both within the chemical industry and in other sectors, have recognized benefits from involving their suppliers and customers in various aspects of their business. The area of supply chain management (SCM) has become a critical element in the overall business strategy of improved productivity, reduced costs, and better control of the quality and potential risks associated with raw materials and intermediates. Proactive management of supplier environmental performance, as practiced by Hewlett Packard, can lead to product and process simplification, improved resource efficiency, product quality enhancement, reduced liability, and customer perception of the company as an industry leader. 

Hard questions have to be asked. What are the actual costs of doing business The long-term cost of reduced quality in lost product loyalty and warranty liability What are the costs in productivity for knowledge workers when wages are low, and personal training and development opportunities non-existent What are the costs of taking on much more risk than the rewards warrant How will it affect the organization to set environmental stewardship aside for short-term profits ... 

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