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August 27, 2021
By Nick Paul Taylor | MedTechDive.com (August 27, 2021) -- DIVE BRIEF: After Philips recalled millions of sleep apnea and ventilator devices, the company is now facing scrutiny from a U.S. lawmaker and a proposed class action from patients.
The first suit was filed in Massachusetts by plaintiff Nick Manna days after Philips announced the recall in June. Since then, other plaintiffs have filed consumer class action lawsuits and individual personal injury claims in the U.S. and Canada. Philips has previously said it "is unable to reliably estimate the financial effect of these matters, if any," but acknowledges they could have a material impact.
Separately, a letter to Vitor Rocha, CEO of Philips North America from Sen. Richard Blumenthal, D-Conn. demands information on how many patients are impacted by the recall, how many have been given repair kits and been contacted by Philips, and the company's "timeline for submitting a mitigation plan with sufficient evidence to [the Food and Drug Administration] for authorization of a permanent solution."
Philips announced the recall of 3 million to 4 million sleep apnea and ventilator devices in June. The recall was then labeled a Class I event by the FDA, the agency's severest recall labeling. More than 100 injuries and 1,200 complaints have been reported for numerous products, and another 83 complaints due to malfunctions were reported, the FDA has said.
The action has led to a substantial drag on Philips' business and has opened the door for rival ResMed to fill the void. ResMed executives said during an August earnings call that the Philips recall could add up to $350 million in sales. However, the company is also facing manufacturing constraints that may limit potential gains.
While Philips has set aside roughly €511 million ($601 million) in provisions, the money is to cover the field action for the recall, not legal cases.
The lawsuits have kept coming since Manna filed the first case more than two months ago. Last week, lawyers at Silver Golub & Teitell, the firm involved in the Manna case, submitted a class action complaint in Massachusetts featuring around 30 named plaintiffs "on behalf of themselves and all others similarly situated" to demand a jury trial.
The plaintiffs are seeking damages for "negligence, breach of contract, breach of express warranty, breach of implied warranties, and breaches of various state consumer protection laws" in relation to the production of recalled Philips' devices.
In the case filed last week, the plaintiffs accused Philips of "unreasonably" delaying the recall of the devices. Philips disclosed problems with its sound abatement foam in late April and began the recall seven weeks later. However, the plaintiffs argue "it is unlikely that defendants only recently learned of these issues" given they affect all Philips Respironics devices manufactured since 2009.
"It was only after the early April 2021 release of the Philips Respironics DreamStation 2, a breathing device which does not contain the dangerous PE-PUR Foam, that Philips publicly admitted the problems with the Recalled Devices in a regulatory filing," the lawsuit states.
Manna and the other plaintiffs filed in Massachusetts because Philips' U.S. operation is based out of Cambridge. Other plaintiffs have filed class action lawsuits in the Western District of Pennsylvania, where the Philips' Respironics subsidiary that sells the recalled DreamStation products is based. The courts are expected to decide whether to consolidate the cases and where they will be heard later in the year.
Philips discussed the growing list of legal cases against it in conjunction with the release of its second-quarter results last month. However, Philips is yet to make a provision for legal cases, either to defend itself from users of its devices or, as an analyst suggested it may do, to file lawsuits against sellers of ozone cleaning products implicated in the degradation of its sound abatement foam.
On top of the lawsuits, the company is also now under pressure from Sen. Blumenthal.
The senator, who also asks why the delay from April to June on taking action, is requesting that Philips provide a list of information regarding the recall and impact on patients by Sept. 7. The list includes information on how Philips is reaching affected patients, the percentage of impacted patients that have had their recalled devices replaced or repaired, and when the company plans to have all affected devices replaced or repaired, among others.
The letter follows reports of patients who require the devices facing health risks as they have few replacement options and some who were not notified of the recall by the company.
"I have heard from a number of my constituents in Connecticut with similar concerns, such as a lack of information from Philips, first learning about the recall second hand, and no help in accessing the promised replacements or repairs that Philips continues to reference," Blumenthal wrote. "The current situation is untenable, unacceptable, and must be immediately rectified."
Philips did not respond to a request for comment by the time of publication.