Dive Brief:
- Philips reached an agreement with the Department of Justice to pay 288 million euros (about $322 million) to settle criminal and civil investigations related to its recall of millions of sleep and respiratory devices, the company disclosed Tuesday.
- Philips began the recall of more than 15 million devices in 2021 after finding soundproofing foam could break down and be inhaled by users. The recall included continuous positive airway pressure and bilevel positive airway pressure machines, as well as ventilators.
- The settlement is separate from a consent decree the Food and Drug Administration struck with Philips in 2024, which has barred the sale of certain respiratory devices in the U.S. until Philips meets requirements set out by the agency.
Dive Insight:
Philips plans to pay the settlement in the first quarter of 2027. It is subject to finalization of relevant documentation, the company said.
Philips first noted problems with the soundproofing foam used in its devices in 2018, adding foam replacement to the maintenance schedule for its machines after finding it could degrade into particles. The company had received complaints dating back as far as 2014. However, Philips did not disclose the change to the FDA, which discovered the foam issues during a 2021 inspection.
Through a consent decree, a rare action for the FDA, the agency required Philips to submit a plan to repair, replace or refund the affected devices. The agreement also barred Philips from manufacturing or selling certain Respironics devices in the U.S.
“We are not in control of any timing around the return to market,” CEO Roy Jakobs said in a Tuesday earnings call. “We keep working towards that so that actually we are ready, but ultimately it needs to be granted by the FDA, and we keep working with them.”
Outside of the U.S., Philips has seen growth with its sleep devices, Jakobs said.
The recent settlement excludes other proceedings, such as an investigation by U.S. state attorneys general, according to the company.
