Sam Brusco, Associate Editor04.10.24
The U.S. District Court for the Western District of Pennsylvania entered a consent decree of permanent injunction against Philips RS North America LLC (Philips Respironics), Respironics California LLC, and Philips Holding USA Inc., and Roy Jakobs, CEO of Royal Philips, along with several other individual defendants named in the decree.
The decree, with limited exceptions, restricts production and sale of new continuous positive airway pressure (CPAP) machines, bi-level positive airway pressure (BiPAP) machines and other devices at several Philips Respironics facilities in the U.S. until certain requirements are met.
The consent decree includes provisions to allow for exports. Outside the U.S., Philips Respironics will continue to provide new sleep and respiratory care devices, accessories (including masks), consumables (including patient circuits), replacement parts (including repair kits) and services, subject to requirements that the company will meet.
The consent decree provides Philips Respironics with a roadmap of defined actions, milestones, and deliverables to meet relevant regulatory requirements.
The company must continue to prioritize completing remediation of sleep and respiratory devices under Respironics’ voluntary June 2021 recall. Business operations must also show continued compliance with the U.S. Food and Drug Administration (FDA)’s current good manufacturing practice requirements for medical devices. Respironics will retain independent experts to supervise the compliance improvement program.
“Strengthening patient safety and quality remains Philips’ highest priority and the increased scrutiny will help us to improve even more,” Philips CEO Roy Jakobs told the press. “With the agreement on a consent decree for Philips Respironics in place, we now have a clear path forward to gradually restore the business, serving patients around the world.”
In April 2021, Philips recalled over five million devices due to dangerous degradation of the PE-PUR sound abatement foam. The Respironics business lost a large share of the sleep respiratory market because of repeated issues related to the sleep apnea machines.
While Philips continues to work through the remediation process, more information came to light on how the recall occurred as it did. ProPublica and the Pittsburgh Post-Gazette reported that Philips withheld CPAP issues from the FDA for years.
Philips expects costs of around 100 basis points in 2024 that relate to remediation activities and profit disgorgement payments for Philips Respironics sales in the US.
The previously stated 2023-2025 Group financial outlook of mid-single-digit comparable sales growth, low-teens Adjusted EBITA margin, and EUR 1.4-1.6 billion free cash flow now takes the consent decree into account and remains unchanged. It excludes the investigation by the U.S. DOJ related to the Respironics field action and impact of the ongoing litigation.
“Patient safety and quality is our number one priority,” said Philips chief patient safety and quality officer Steve C de Baca. “We know what we must do to meet the consent decree requirements. Philips Respironics has been working with the FDA, and is already making significant changes in its organization, quality management systems and operations. This includes strengthening the quality management processes and deepening the competencies of the relevant teams. We are fully committed to meeting the terms of the consent decree and continuing to serve the millions of patients who rely on our devices every day.”
The decree, with limited exceptions, restricts production and sale of new continuous positive airway pressure (CPAP) machines, bi-level positive airway pressure (BiPAP) machines and other devices at several Philips Respironics facilities in the U.S. until certain requirements are met.
The consent decree includes provisions to allow for exports. Outside the U.S., Philips Respironics will continue to provide new sleep and respiratory care devices, accessories (including masks), consumables (including patient circuits), replacement parts (including repair kits) and services, subject to requirements that the company will meet.
The consent decree provides Philips Respironics with a roadmap of defined actions, milestones, and deliverables to meet relevant regulatory requirements.
The company must continue to prioritize completing remediation of sleep and respiratory devices under Respironics’ voluntary June 2021 recall. Business operations must also show continued compliance with the U.S. Food and Drug Administration (FDA)’s current good manufacturing practice requirements for medical devices. Respironics will retain independent experts to supervise the compliance improvement program.
“Strengthening patient safety and quality remains Philips’ highest priority and the increased scrutiny will help us to improve even more,” Philips CEO Roy Jakobs told the press. “With the agreement on a consent decree for Philips Respironics in place, we now have a clear path forward to gradually restore the business, serving patients around the world.”
In April 2021, Philips recalled over five million devices due to dangerous degradation of the PE-PUR sound abatement foam. The Respironics business lost a large share of the sleep respiratory market because of repeated issues related to the sleep apnea machines.
While Philips continues to work through the remediation process, more information came to light on how the recall occurred as it did. ProPublica and the Pittsburgh Post-Gazette reported that Philips withheld CPAP issues from the FDA for years.
Philips expects costs of around 100 basis points in 2024 that relate to remediation activities and profit disgorgement payments for Philips Respironics sales in the US.
The previously stated 2023-2025 Group financial outlook of mid-single-digit comparable sales growth, low-teens Adjusted EBITA margin, and EUR 1.4-1.6 billion free cash flow now takes the consent decree into account and remains unchanged. It excludes the investigation by the U.S. DOJ related to the Respironics field action and impact of the ongoing litigation.
“Patient safety and quality is our number one priority,” said Philips chief patient safety and quality officer Steve C de Baca. “We know what we must do to meet the consent decree requirements. Philips Respironics has been working with the FDA, and is already making significant changes in its organization, quality management systems and operations. This includes strengthening the quality management processes and deepening the competencies of the relevant teams. We are fully committed to meeting the terms of the consent decree and continuing to serve the millions of patients who rely on our devices every day.”