Dutch health technology company Royal Philips has reached an agreement with the US Food and Drug Administration (FDA) to halt sales of its sleep and respiratory care devices in the US, following a massive recall of millions of the devices over potential health risks.
Background of the Recall
In June of 2021, Philips initiated a massive voluntary recall of 15 million sleep and respiratory care devices globally due to potential health risks from degraded sound abatement foam used in the devices. The foam was found to possibly degrade into particles that enter the device’s air pathway and be ingested or inhaled by users. The foam breakdown could also release chemicals that may be toxic or carry cancer risks.
Specifically, the recall involved several models of Continuous Positive Airway Pressure (CPAP), Bi-Level Positive Airway Pressure (BiLevel PAP) and mechanical ventilator devices made before April 26, 2021. CPAP and BiPAP machines are used to treat sleep apnea, a potentially serious disorder in which breathing repeatedly stops and starts during sleep.
By the time Philips announced the recall, the company had received over 100 complaints globally about possible patient impact related to foam degradation. Complaints included headache, irritation, inflammation, respiratory issues and possible toxic and carcinogenic effects.
Details of FDA Agreement
Under the terms of the consent decree agreement finalized on January 28th, 2024, Philips has agreed to immediately suspend the manufacture and distribution of certain sleep and respiratory care devices marketed in the US.
This includes all Continuous Positive Airway Pressure (CPAP), BiLevel PAP and mechanical ventilator devices that may still contain the PE-PUR sound abatement foam. Specifically, Philips will halt sales and distribution of the following:
- Philips-branded CPAP and BiLevel PAP devices
- Trilogy 100 and 200 model ventilators
- Garbin Plus, Aeris, LifeVent and A-Series BiPAP and ventilator devices
- Certain devices used for invasive and non-invasive ventilation
“The agreement means patients in the US will not have access to certain new Philips-branded sleep and respiratory care devices during this suspension period,” the company stated.
Philips is required to follow the terms of the consent decree for at least the next five years, during which the FDA will actively monitor Philips’ compliance. However, Philips may still resume manufacturing and sales earlier if approved by the FDA after meeting certain milestones.
To gain FDA approval to resume sales, Philips will have to demonstrate that its quality system and manufacturing processes ensure the safety and effectiveness of the devices. This includes quality audits, environmental testing, safety testing and biocompatibility testing.
Financial Impact and Future Plans
Philips reported a net loss of €105 million in Q4 2023, after taking a further €195 million charge primarily for the sleep device recall. For full-year 2023, Philips’ net loss amounted to €1.605 billion.
“Philips’ financial results for 2023 reflect the profound challenges posed by the sleep and respiratory care devices recall,” stated departing CEO Frans van Houten.
To turn around its struggling business, Philips announced a major reorganization plan impacting around 8,000 employees globally. This includes reducing 6,000 positions worldwide by 2025, with 3,000 happening immediately. The job cuts relate primarily to overhead and manufacturing functions. Philips aims to restore profitability with low-to-mid single-digit comparable sales growth and a low-teens Adjusted EBITA margin by 2025.
Philips has taken a total charge of €2.7 billion to date for the estimated costs of the device recall and remediation efforts. This includes setting up a comprehensive patient remediation program to repair and replace recalled devices where needed.
So far, Philips has shipped around 90% of the production volumes planned for providing replacements and repairs to patients requiring those solutions.
“Philips deeply regrets the situation and remains fully committed to supporting affected patients and customers,” stated CEO Roy Jakobs. “We continue to ramp up replacements and repairs, supported by the necessary increases in production and service capacity.”
What This Means for Sleep Apnea Patients
With Philips suspending US sales of new sleep apnea devices like CPAP and BiPAP machines, patients may need to look to other manufacturers for their treatment options. Competitors like ResMed may stand to benefit as alternative suppliers.
However, Philips emphasized that it can continue supporting users of devices already on the market and that existing patients won’t experience added disruption from the consent decree itself. Patients can still obtain accessories, consumables, replacement devices or service kits from Philips as needed to ensure therapy continuity.
“I want to stress that services to patients continue uninterrupted, and our field service engineers remain available to ensure patients benefits from ongoing support,” stated Jakobs.
Since initiating the recall in June 2021, Philips has faced criticism over its slow pace of repairs and replacements. Long wait times caused thousands to turn to legal action over potential health impacts. Under the consent decree, Philips must undertake a rigorous patient registry study to ascertain benefits and risks of recalled foam in devices that haven’t yet been remediated or replaced.
With this latest move of suspending sales, it remains to be seen whether Philips can fully regain public trust and market dominance in sleep and respiratory devices. Much still hinges on efficiently resolving the massive recall affecting millions globally. For patients relying on the devices daily, receiving timely replacements or repairs is their top priority.
Tables Comparing Financial Impact
|Key Financial Metrics
|Comparable Sales Growth
|Adjusted EBITA Margin
|Net Profit (Loss)
|Initiated June 2021
|To Date Jan 2024
So in summary, Philips has taken a major financial hit from the extensive sleep device recall, posting significant declines and even losses this past year. The company announced sweeping job cuts as part of major restructuring efforts to restore profitability in coming years. However, Philips remains focused on supporting patients affected by the recall through ramping up replacement devices and repairs globally.
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