In a significant development, Royal Philips NV, a prominent Dutch medical equipment manufacturer, has encountered a fresh setback as the US Food and Drug Administration (FDA) has called for further examinations on its sleep apnea devices. The agency has raised concerns, asserting that the company’s assessment of the recalled products is insufficient.
This latest twist comes in the wake of the recall of the BiPAP and CPAP machines in June of 2021. The FDA swiftly classified this action as a Class 1 matter, denoting it as the most severe category of concern. Philips had previously allocated approximately €1 billion ($1.1 billion) for the recall of around 5.5 million devices, in addition to consenting to pay a minimum of $479 million to settle certain litigations.
The FDA has emphasized the necessity for supplementary testing to comprehensively evaluate potential risks, citing initial findings indicating that exposure to the devices is unlikely to result in significant harm to patients’ health. In the aftermath of this news, Philips’ shares experienced a sharp decline of up to 10% in Amsterdam, marking the steepest drop in a year. Bernstein analyst Lisa Bedell Clive observed that this recent move by the FDA amplifies the likelihood of a sales ban on the company’s products in the US.
Philips is presently engaged in discussions with both the FDA and the US Department of Justice, the latter of which is conducting its own investigation into the company’s affairs, to determine the specifics of the additional testing. CEO Roy Jakobs previously acknowledged that the ramifications of this costly recall could persist for as long as seven years.
This development could potentially compel the medical equipment manufacturer to halt certain operations in the US until all necessary corrective measures are implemented. Furthermore, Philips remains entangled in a web of class-action suits and potentially thousands of individual legal actions.
Initially, the FDA had placed CPAP and BiPAP devices on its shortage list due to a scarcity of supply. However, the agency has now removed them from this list following collaborative efforts with other manufacturers and government partners to ramp up production during the recall process.
According to ING analyst Marc Hesselink, the call for additional testing is anticipated to lead to further delays in the resolution process. He underscored that the company awaits a consent decree with the FDA, as well as a resolution regarding potential patient harm, before being able to forge ahead.
In the broader context, this latest setback concerning Philips’ sleep apnea devices underscores the complexities that can arise within the medical industry during product recalls. It serves as a stark reminder of the imperative need for rigorous precautionary measures to safeguard patient well-being and underscores the critical importance of thorough evaluation in product safety assessments.
Source: Bloomberg
