Philips Says Recall Fix May Not Wrap in 2022

BIRMINGHAM, Alabama (April 25, 2022)—Philips expects to produce and ship more than 90% of new or repaired devices to consumers to replace their recalled CPAP, BiPAP and mechanical ventilators by the end of 2022, the company said Monday.

“We are replacing or repairing the devices related to the Respironics field action as fast as possible and are continuing to update patients and customers about the progress of the program,” Royal Philips CEO Frans van Houten said during the company’s quarterly earnings call. “We have a strong program management in place overseeing every aspect of the remediation, which involves more than 1,000 of our colleagues.”

He said Philips Respironics has produced more than 2.2 million repair kits and replacement devices so far.

Philips said that sales were down 21% in its Connected Care division in the second quarter of 2022 compared to the same quarter of 2021, mostly due to the recall and ongoing supply chain “headwinds.”

Respironics put an additional 65 million euros toward the field action provision in the second quarter to help meet the higher expected volume of devices and to cover higher communication costs; that comes atop about 725 million euros set aside last year. The company also reported another 100 million euros for potential higher cost of execution and to “ensure the speed of the program in a volatile environment,” and an additional 50 million of running remediation costs, the results said.

The Food and Drug Administration (FDA) ordered Philips in March to boost its efforts to inform patients and providers, and Philips said it was complying.

“Philips Respironics and the FDA are fully aligned on the need to increase awareness of the recall and give health care providers, consumers and patients access to timely information,” the company said.

The company has also made organizational changes to improve oversight, it said in a news release. The report says it onboarded new top management in its sleep and respiratory business and strengthened quality and regulatory affairs leadership.

Philips also revealed that Respironics and some of the company’s subsidiaries in the U.S. received a subpoena April 8 from the Department of Justice to provide information related to events leading to the Respironics recall. The relevant subsidiaries are cooperating with the agency, the company said. CEO van Houten said on the earnings call that the company wasn’t aware of any specific allegations but the DOJ “are preparing an investigation and we just have to accept that.”

And Philips also said that it expects the more than 100 class action lawsuits pending against it to be consolidated into two cases this summer.